Understanding Consensus Demand, Demand Priority and Fulfillment

Objective

After completing this lesson, you will be able to define the customer – demand, supply, and response.

Defining Customer Demand and Demand Prioritization

The figure, Definition of Customer: Demand, Supply, and Response, shows you explanation of the specific definition of customer.

Key Account (DEMFCSTACCOUNT) is used for forecasting and customer-facing teams to collaborate on demand. It is possible that the customer forecast collaboration process is also carried out at this level.

Only the top customer accounts are given detailed attention. The rest can be grouped under a catch-all ID, for example, ALLOTHER.

Note

The attributes, planning levels, and values defined are examples and will require additional modeling from sample planning area SAPIBP1.

Forecast consumption is carried out as a pre-step before supply planning.

The supply customer is aligned with the class of service, that is, customer grouping is done by location, rather than by individual key account:

  • Fair-share works better with fewer demands
  • Supply planners care more about product mix and positioning inventory than customer fulfillment of individual key accounts within a class of service
  • Run-times for optimizer
  • Fewer customer-product combinations to manage
  • Response - needs more granular customer to represent sales order confirmations; allocations may be performed at the key account

Note

The terms "crossover" and "discount" are neither technical nor SAP terms. They simply convey how protection is provided across time buckets between demand layers.

Demand prioritization is not just for a product, but applies to all products in a network. Penalties and costs drive both:

  • Production and distribution decisions
  • Better use of common constraints such as capacity and material
The figure, Customer Demand: Demand and Fulfillment Key Figures, shows you Key figures related to demand and fulfillment from the IBP supply perspective.

Key figures related to demand and fulfillment from the IBP supply perspective are listed here for quick reference - for more information, see the online help.

The figure, Independent Demand: Independent Demand and Fulfillment Key Figures, shows you Key figures related to demand and fulfillment from the IBP supply perspective for independent demand.

Like customer demand, independent demand also has its share of key figures.

The figure, Demand: Modeling Considerations, shows you a guidelines to achieve a better cost model and a better-performing solution.

With modeling, there is a great degree of flexibility - follow the guidelines from the picture to achieve a better cost model and a better-performing solution.

Modeling Customer Priority

ExerciseStart Exercise

Modeling Customer Priority

Business Example

In this exercise, you model a high-priority customer with a Z pattern, and medium- and low-priority customers with inverted N-patterns. Your goal is to get 21 days as crossover between the high-priority customer and the rest. To keep it simple, you gradually turn off inventory holding costs and max inventory violation costs – in actual implementations, they will be present of course. Maximum inventory violation cost rates is used here for gradual reduction purposes only against a maximum inventory of 0.

To better understand the prioritization, you also run an isolated example with on-hand inventory only and cut off supplies to node 2400, by setting the inbound lanes to 2400 to invalid.

Check your planning area ZSAP4 and student group number assignment with the instructor before you start. Where this exercise uses ##, use your group number instead.

Task 1: Review the Demand and Supply Situation for the Pump T-F3##

Steps

  1. Review the demand and supply situation for the pump T-F3##.

    1. Access and log on to the SAP IBP, add-in for Microsoft Excel.

    2. Go to Favorites→Group ## Pump.

    3. Choose the Customer Demand tab and filter it by the product ID T-F3##.

      The figure shows the Planning view based on the selection.

Task 2: Change the Existing Data for T-F3##

Steps

  1. Turn off all lateness by setting the Max Late-Delivery for Demand to null.

    1. Choose Master Data Workbook.

    2. In the Create Master Data Workbook window, choose the master data type Customer Product Category.

    3. Filter the Product ID column by T-F3##.

    4. In the Maximum Late-Delivery Periods for Customer Demand column, remove the existing values. The other columns remain unchanged.

      The figure shows the Customer Product Category master data.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  2. For Product ID T-F3##, set the Location Source Invalid indicator for the following combinations:

    Ship-from LocationLocation IDMOT IDLocation Source Invalid
    22002400RAILX
    22002400TRUCKX
    22002500RAILX
    22002500TRUCKX
    22102400RAILX
    22102400TRUCKX
    22102500RAILX
    22102500TRUCKX
    23002200TRUCKX
    23002210TRUCKX

    1. Choose Master Data Workbook.

    2. In the Create Master Data Workbook window, choose the master data type Location Source.

    3. Filter the Product ID column by T-F3##.

    4. Make the changes according to the table.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  3. Set the inventory at location 2400 to 2000 units. Use the data from the table:

    Product IDLocation IDLocationKey FigureToday's Date
    T-F3##2400Milano DCStock on Hand2000

    1. Select the Inventory tab.

    2. Change the planning view filter to location 2400

    3. In the first time bucket, enter 2000 units of stock on hand at location 2400. If in doubt, use the data from the table.

    4. Choose Save Data.

  4. Run the optimizer and validate the results.

    1. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    2. Select the planning operator Profile 1_Optimizer_No Fairshare_##.

    3. Under Scenarios, check that the Baseline checkbox has been defaulted.

    4. Under Versions, check that the Base Version checkbox has been defaulted.

    5. Under Planning Unit, check that the ##_PUMP checkbox has been defaulted.

    6. Choose Next.

    7. Choose Run.

  5. Add the key figure Non-Delivery Cost Rate for Customer Demand to the Customer Demand Sheet of your planning view to better understand the demand prioritization.

    1. You may have to add the attribute Customer ID to the Customer Demand Sheet. The attribute was removed in a previous exercise.

      The figure shows the Planning view based on the selectionThe figure shows the Planning view based on the selection

Task 3: Change the Max Inventory Violation Cost Rate to Null for Product ID T-F3## at Location ID 2400

Steps

  1. Change the max inventory violation cost rate to null for product ID T-F3## at location ID 2400. Use the data from the table:

    Location IDProduct IDMaximum Inventory Violation Cost Rate
    2400T-F3##null

    1. Select Master Data Workbook.

    2. In the Edit Master Data Workbook window, choose the master data type Location Product.

    3. Filter the Product ID column by T-F3## and the Location ID by 2400.

    4. In the Maximum Inventory Violation Cost Rate column set the value to null. If in doubt, use the data from the table.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  2. Run the optimizer and validate the results.

    1. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    2. Select the planning operator Profile 1_Optimizer_No Fairshare_##.

    3. Under Scenarios, select the Baseline checkbox.

    4. Under Versions, select the Base Version checkbox.

    5. Under Planning Unit, select the ##_PUMP checkbox.

    6. Choose Next.

    7. Choose Run.

    1. The figure shows the Planning view based on the selectionThe figure shows the Planning view based on the selection

Task 4: Remove the Inventory Holding Cost Rate

Steps

  1. Remove the inventory holding cost rate. Use the data from the table:

    Location IDProduct IDInventory Holding Cost Rate
    2400T-F3##null

    1. Choose Master Data Workbook.

    2. In the Edit Master Data Workbook window, choose the master data type Location Product.

    3. Filter the Product ID column by T-F3## and the Location ID column by 2400.

    4. In the Inventory Holding Cost Rate column, set the value to null according to the table.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  2. Run the optimizer and validate the results.

    1. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    2. Select the planning operator 1_Optimizer_##.

    3. Under Scenarios, select the Baseline checkbox.

    4. Under Versions, select the Base Version checkbox.

    5. Under Planning Unit, select the ##_PUMP checkbox.

    6. Choose Next.

    7. Choose Run.

    1. The figure shows the Planning view based on the selection

Task 5: Increase the On-hand Inventory

Steps

  1. Set the inventory at location 2400 to 2700 units. Use the data from the table:

    Product IDLocation IDLocationKey FigureToday's Date
    T-F3##2400Milano DCStock on Hand2700

    1. Choose the Inventory tab.

    2. In the first time bucket, enter 2700 units of stock on hand at location 2400 according to the table.

    3. Choose Save Data.

  2. Run the optimizer and validate the results.

    1. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    2. Select the planning operator Profile 1_Optimizer_No Fairshare_##.

    3. Under Scenarios, select the Baseline checkbox.

    4. Under Versions, select the Base Version checkbox.

    5. Under Planning Unit, select the ##_PUMP checkbox.

    6. Choose Next.

    7. Choose Run.

    1. The figure shows the Planning view based on the selection

Task 6: Revert the Master Data and Key Figure Changes Made in this Exercise

Steps

  1. If you are not doing the optional exercise for late demands, remove the Location Source Invalid Flags for all lanes now.

Modeling Demand Lateness (Optional)

ExerciseStart Exercise

Modeling Demand Lateness (Optional)

In this optional exercise, you use the SAP IBP, add-in for Microsoft Excel to model master data and run the optimizer in order to manipulate demand fulfillment.

Check your planning area ZSAP4 and student group number assignment with the instructor before you start. Where this exercise uses ##, use your group number instead.

Task 1: Edit the Master Data for Lateness and Transportation Lead Times

Steps

  1. For product T-F3##, set the Maximum Late-Delivery Periods for Customer Demand to 7 days for Category ID 1, and to 14 days for Category ID 3. Use the data from the table:

    Demand Category IDCustomer IDProduct IDMaximum Late-Delivery Periods for Customer Demand
    12200H_##T-F3##7
    12400H_##T-F3##7
    12400L_##T-F3##7
    12400M_##T-F3##7
    12500H_##T-F3##7
    12500L_##T-F3##7
    12500M_##T-F3##7
    32200H_##T-F3##14
    32400H_##T-F3##14
    32400L_##T-F3##14
    32400M_##T-F3##14
    32500H_##T-F3##14
    32500L_##T-F3##14
    32500M_##T-F3##14

    1. Choose Master Data Workbook.

    2. In the Create Master Data Workbook window, choose the master data type Customer Product Category.

    3. Filter the Product ID column by T-F3##.

    4. In the Maximum Late-Delivery for Customer Demand column, enter the data from the table.

    5. Choose Save Changes.

  2. Activate the location sources from 2200 to 2400 by removing the Location Source Invalid entry X. Use the data from the table:

    Ship-From Loc. IDLocation IDMode of Transportation IDProduct IDLead TimeLocation Source Invalid
    22002400RAILT-F3##21 
    22002400TRUCKT-F3##7 
    22002500RAILT-F3##21X
    22002500TRUCKT-F3##5X
    22102400RAILT-F3##21X
    22102400TRUCKT-F3##7X
    22102500RAILT-F3##21X
    22102500TRUCKT-F3##5X
    23002200TRUCKT-F3##3X
    23002210TRUCKT-F3##3X

    1. Choose Master Data Workbook.

    2. In the Edit Master Data Workbook window, choose the master data type Location Source.

    3. Set a filter for Product ID T-F3##.

    4. In the Location Source Invalid column, remove the X for the lanes 2200 to 2400 (Truck and Rail).

    5. Choose Save Changes.

    6. Exit the Master Data Excel. If you prefer, you can also keep the master data workbook open because it will be used again in following steps and exercises. If you keep the master data workbook open, you just have to go back to your master data workbook instead of creating a new master data workbook. You can also save the master data workbook with your filters as favorite in order to speed up the exercises on the next days.

Task 2: Remove Any Competing Demands from Locations 2200 and 2500, so that We Consider Only the Demands at Location 2400

Steps

  1. Remove the existing demand for T-F3## master data at locations 2500 and 2200.

    1. Choose Master Data Workbook.

    2. In the Create Master Data Workbook window, choose the master data type Customer Product Category.

    3. Filter the Product ID column by T-F3##. Furthermore, also apply a filter for customers as shown below.

    4. In the Consensus Demand column, remove the existing values. In our setup the Consensus Demand is modeled as an attribute as key figure. Therefore the master data workbook changes update the Consensus Demand key figure. Only remove the demands for customers connected to locations 2200 and 2500 and keep the demands of customers connected to location 2400 as indicated in the screenshot below.

      The figure shows the Customer Product Category master data.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

Task 3: Maintain the On-hand Inventory for T-F3## at Locations 2400 and 2200

Steps

  1. Use Stock on Hand as the KF to enter inventory values. However, if the time of day is such that, you have crossed over the next day, use KF Inventory Correction and enter the values for next day. Use the data from the table:

    Location IDLocationKey FigureToday's Date
    2200Paris FDCStock on Hand300
    2400Milano DCStock on Hand450

    1. Choose the Inventory tab.

    2. In the first time bucket, enter 300 and 450 units of stock on hand at locations 2200 and 2400 respectively according to the table.

    3. Choose Save Data.

Task 4: Set Parameters Before Optimizer Run

Steps

  1. Deactivate discretization for your S&OP operator profile and set the Production Minimum and Incremental Lot Size horizons to 0.

    1. On the SAP Fiori home screen, in the TS Supply Planning Configuration section, choose the S&OP Operator Profiles tile.

    2. Select the S&OP operator Profile 1_Optimizer_No Fairshare_## .

    3. In the Display S&OP Operator Profile window, choose Edit.

    4. Under Optimizer Parameters, expand the Discretization section.

    5. There are 6 discrete horizons with value 42. Replace 42 by 0 and save.

      The figure shows the Discretization options in the Optimizer parameters.

Task 5: Run the Optimizer and Validate the Results

Steps

  1. Run the optimizer and review the results.

    1. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    2. Select the planning operator Profile 1_Optimizer_No Fairshare_##.

    3. Under Scenarios, select the Baseline checkbox.

    4. Under Versions, select the Base Version checkbox.

    5. Under Planning Unit, select the ##_PUMP checkbox.

    6. Choose Next.

    7. Choose Run.

    1. Go to the Customer Demand Sheet of your favorite. You will see that stock on hand in location 2400 of 450 is used to fulfill early demands without delay. After the lead time of 7 days additional stock of 300 arrives from location 2200 and it is used to fulfill demands without delay.

      The figure shows the Planning view based on the selection

  3. Reactivate the location sources from location 2300 by removing the Location Source Invalid flag. Use the data from the table:

    Ship-From Loc. IDLocation IDMoT IDProduct IDLead TimeLocation Source Invalid
    23002200TRUCKT-F3##3 
    23002210TRUCKT-F3##3 

    1. Choose Master Data Workbook.

    2. In the Edit Master Data Workbook window, choose the master data type Location Source.

    3. Filter the Product ID column by T-F3##, the Ship-From Loc. ID column by 2300, and the Location ID column by 2200 & 2210.

    4. In the Lead Time column, enter 3 according to the table.

    5. Choose Save Changes.

  4. Run the optimizer and validate the results after a fresh log on to Excel.

    1. Log off from Excel and log on again in order to synchronize the latest optimizer profile changes.

    2. In the Microsoft Excel SAP IBP tab, choose Application Jobs, then S&OP Operator.

    3. Select the planning operator Profile 1_Optimizer_No Fairshare_##.

    4. Under Scenarios, check that the Baseline checkbox has been defaulted.

    5. Under Versions, check that the Base Version checkbox has been defaulted.

    6. Under Planning Unit, check that the ##_PUMP checkbox has been defaulted.

    7. Choose Next.

    8. Choose Run.

      Result

      The figure shows the Planning view based on the selection

      Notice that there are supplies from plant 2300 into 2200 and to 2400 later. First existing stock in 2400 is used to fulfill early demands without delay. Then the stock on hand from 2200 arrives in 2400 on 2nd May. This is used to fulfill demands partially delayed. The next receipt of new production is received on 12th May and it is used to fulfill demands mostly with delay. Your results may differ because there are many different delay combinations with the same or very similar costs (inside the optimality tolerance).

      The figure shows the Planning view based on the selection

  5. Restore the original lead times for all lanes.

    1. Choose Master Data Workbook.

    2. In the Edit Master Data Workbook window, choose the master data type Location Source.

    3. Filter the Product ID column by T-F3##.

    4. Remove all entries in the Location Source Invalid column.

      The figure shows the Location Source master data.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  6. Restore discretization for your S&OP operator profile and set the Production Minimum and Incremental Lot Size horizons to the previous settings.

    Discretization

    • Default Horizon: 42 days
    • Default Horizon for Transports: 42 days
    • Horizon for Transports Minimum Lot Sizes: 42 days
    • Default Horizon for production: 42 days
    • Horizon for Production Minimum Lot Sizes: 42 days
    • Horizon for Production Incremental Lot Sizes: 42 days

  7. Remove stock on hand for T-F3## in locations 2200 and 2400 via the Inventory sheet. If you used the inventory correction key figure in Task 3, also remove these values.

Learning

SAP FacebookSAP YoutubeSAP LinkedIn