Understanding Distribution Planning

Objective

After completing this lesson, you will be able to explain the key challenges with distribution.

Understanding Distribution Planning

The figure shows the Key Challenges with Distribution.

Production planning and distribution planning can be performed in a single step for small networks.

If the network is very large, distribution planning is often run as a second step after production planning. In this case, the production plan is frozen, and the network distribution plan is generated for a smaller horizon, for example, 60 days.

Some distribution constraints may be considered in the production planning step as well, to ensure that the required supply exists to support the distribution plan.

The figure shows an explanation for multiple modes of transports.

Sometimes, customers use one mode of transport as default, and leave the optional MoT as exceptions only for planners.

Establishing minimum or maximum transports (either supply or receipts) by SKU is possible.

Unlike SAP ERP, SAP S/4HANA is capable of dealing with multiple modes of transport, making it possible to have an end-to-end optimized process flow.

The figure shows a quick reference of the relevant key figures for transportation.

The figure shows a quick reference of the relevant key figures. Additional configuration is necessary for storage resources.

The figure shows and describes the Additional Modeling Parameters.

Minimum and incremental rounding values are not time-dependent master data attributes.

Planning Distribution with Storage Resources

ExerciseStart Exercise

Planning Distribution with Storage Resources

Business Example

In this exercise, you activate storage resources as constraint resources in order to understand the impact on the entire network. When the main distribution center (DC) and the customer-facing DC with customer demands experience storage constraints, excess inventory is planned to be stored in the overflow warehouse. This is true if push production is enabled with minimum resource utilization.

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: Set Up Storage Resources

Steps

  1. Set the following storage capacity values in the location resource master data:

    Resource filter and select all values - WT-S##_

    Location IDResource IDCapacity SupplyConstraint Type
    1000WT-Sxx_1000_0011000 
    2200WT-Sxx_2200_0013000 
    2210WT-Sxx_2210_0014000 
    2300WT-Sxx_2300_0011000 
    2400WT-Sxx_2400_0014000 
    2500WT-Sxx_2500_0014000 

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

    2. Choose Master Data Workbook.

    3. In the Create Master Data Workbook window, choose the master data type Location Resource.

    4. Filter the attribute Resource ID by your WT_S## Storage Resources.

    5. Make the changes based on the table.

      Revise the capacity values as requested. Leave the Constraint type column blank (unconstrained).

      Note

      In the location resource, MD Workbook, ensure the constraint type is blank.

    6. Choose Save Changes.

    7. Exit the Master Data Excel.

  2. Set the target inventory (Safety Stock (SOP)) at location 2210 to value 2210.

    The overflow warehouse location 2210 is assigned target inventory for two reasons – to stock some inventory and also to calculate the maximum inventory as 3x the target inventory. Otherwise, the system would not stock any products in the overflow warehouse 2210.

    1. Choose Master Data Workbook.

    2. In the Create Master Data Workbook window, choose the master data type Location Product and filter by the location ID 2210 and product ID T-F2##.

      The figure shows the Master Data Maintenance as mentioned in the step of the exercise.The figure shows the Master Data Maintenance as mentioned in the step of the exercise.

    3. Choose Save Changes.

Task 2: Run the Optimizer and Review the Values

Steps

  1. Run the optimizer.

    1. In the Microsoft Excel SAP IBP tab, choose SOP Operator, then Run.

    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.

    8. Review inventory situation for product F2##:

      The figure shows the Planning View results as mentioned in the step of the exercise.The figure shows the Planning View results as mentioned in the step of the exercise.

      Result

      First dependent demands are visible after the frozen horizon plus lead time (e.g. 7 days frozen horizon plus 2 days lead time for location 2200)
  2. The figure shows the Planning View results as mentioned in the step of the exercise.
    1. The figure shows the Master Data Maintenance as mentioned in the step of the exercise.

  4. Review the inbound and outbound results in detail. (Check the master data type Transportation Cost to see the cost rates.)

    1. The figure shows the Planning View results as mentioned in the step of the exercise.The figure shows the Master Data Maintenance as mentioned in the step of the exercise.
      Results may display slight differences due to the data from previous exercises.

Task 3: Activate Storage Resource Constraints

Steps

  1. Apply the following constraints to storage resource WT-S##_1000_001: 1000 in the location resource master data:

    Location IDResource IDCapacity SupplyConstraint Type
    1000WT-Sxx_1000_0011000F
    2200WT-Sxx_2200_0013000F
    2210WT-Sxx_2210_0014000F
    2300WT-Sxx_2300_0011000F
    2400WT-Sxx_2400_0014000F
    2500WT-Sxx_2500_0014000F

    1. Choose Master Data Workbook.

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

    3. Filter the Resource ID column by S##.

    4. Make the changes based on the table.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

Task 4: Run the Optimizer and Validate the Results

Steps

  1. Run the optimizer.

    1. In the Microsoft Excel SAP IBP tab, choose SOP 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.

    8. Check the results in the planning view Group ## Pump, tab Storage Capacity.

      The figure shows the Planning View results as mentioned in the step of the exercise.

  3. Review the corresponding inbound and outbound shipments.

    1. Inbound tab:

      The figure shows the Planning View results as mentioned in the step of the exercise.

    2. Outbound tab:

      The figure shows the Planning View results as mentioned in the step of the exercise.

      Location 2210 is shipping by rail because location 2200 is maxed out in storage capacity in future buckets.

Task 5: Revert master data change for target inventory at location 2210

Steps

  1. Revert master data change for target inventory at location 2210.

    1. Blank out Safety Stock (SOP) attribute for location ID 2210 and product ID T-F2##.

    2. Save the changes.

Using Prebuild, Storage, and Push Production

ExerciseStart Exercise

Using Prebuild, Storage, and Push Production

Business Example

In this exercise, you enable push production with activation of minimum resource utilization for Line 2 in plant 1000. Because plant 1000 can produce both products F2 and F4, you ensure that F4 is deactivated for production in plant 1000, so that when you push production for line 2, you see increased product flows for F2 in the entire network. This exercise also enables you to manage the validity of sourcing – for production.

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

Steps

  1. Set the production source T-F4##_1000_0001 as invalid in master data type Production Source Header.

    1. Choose Master Data Workbook.

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

    3. Filter the Source ID column by T-F4##_1000_0001.

    4. Make the changes. Set Production Source Invalid attribute to X (capital letter).

    5. Choose Save Changes.

Task 2: Increase Production Capacity

Steps

  1. At location 2300, increase the production capacity of line 1 to 3000 units/day. The Capacity Supply attribute is set up as an attribute as key figures with daily planning level.

    1. Choose Master Data Workbook.

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

    3. Filter the Resource ID column by WT-L##_2300_001.

    4. Make the changes.

    5. Choose Save Changes.

Task 3: Establish Demands

Steps

  1. Set the demand for T-F4## at location 2500 for the high-priority customer to 2000 units/day.

    1. Choose Master Data Workbook.

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

    3. Filter the Customer ID column by 2500H_##, the Product ID column by T-F4##, and the Demand Category ID column by 3.

    4. Make the changes in the Consensus Demand column.

    5. Choose Save Changes.

Task 4: Run the Optimizer and Review the Results

Steps

  1. Run the optimizer.

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

    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.

      The figure shows the Planning View results as mentioned in the step of the exercise.
  2. The figure shows the Planning View results as mentioned in the step of the exercise.The figure shows the Planning View results as mentioned in the step of the exercise.

Task 5: Enable Minimum Capacity

Steps

  1. Make the following settings for production line 2 at location 1000 from 8th day forwards:

    • Min Capacity Usage: 15000 units/day
    • Min Capacity Usage Violation Cost Rate: 10000/day beyond the frozen horizon for the next 30 days

    1. Choose the Production Capacity by Resource tab.

    2. for WT-L##_1000_002: In the "Minimum Capacity Usage" and "Min Capacity Usage Violation Cost Rate" key figures from the 8th day forward enter the following:

      The figure shows the Planning View results as mentioned in the step of the exercise.

    3. Choose Save Data.

Task 6: Run the Optimizer, Check the Business Log, and Review the Results

Steps

  1. Run the optimizer.

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

    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.

  2. Check the Business Log.

    1. In the Microsoft Excel SAP IBP tab, open the SOP Operator dropdown list.

    2. Choose Status.

      A window opens. The status is displayed in the fourth column.

    3. In the fifth column, choose Show Business Log. The following window is displayed:

      The figure shows the Filter option as mentioned in the step of the exercise.

    4. Choose OK to read the report.

      The figure shows the Log results as mentioned in the step of the exercise.

      Result

      The minimum resource utilization rate is only about 11 % due to insufficient demand and storage constraints. Your results may differ by a few percent.
  3. The figure shows the Planning View results as mentioned in the step of the exercise.
    1. The figure shows the Planning View results as mentioned in the step of the exercise.The figure shows the Planning View results as mentioned in the step of the exercise.

      Storage capacity of 2200 is fully utilized. Overflow warehouse 2210 is also fully used later in the horizon. The optimizer determines the best point in time to hit the storage constraint. If the optimizer produced and stored more quantity earlier, then the total possible production quantity would not increase, but additional inventory costs would arise.

Task 7: Increase the Demand for Product T-F2##

Steps

  1. Change the following customers' consensus demand from 100/day to 1000/day for product T-F2## for Demand Category 3:

    • 2400H_##
    • 2500H_##

    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-F2##.

    4. Make the following changes:

      The figure shows the Master Data Maintenance as mentioned in the step of the exercise.

    5. Choose Save Changes.

Task 8: Run the Optimizer, Check the Business Log, and Review 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, then Run.

    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.

  2. Check the business log.

    1. In the Microsoft Excel SAP IBP tab, open the SOP Operator dropdown list.

    2. Choose Status.

      A window opens. The status is displayed in the fourth column.

    3. In the fifth column, choose Show Business Log.

    4. Choose OK to read the report.

      The minimum resource utilization fulfillment rate went up due to increased demand. You will notice the reduction in minimum resource utilization violation costs, but not all is possible due to lack of demand and storage capacity.

      The figure shows the Log results as mentioned in the step of the exercise.

  3. Check new results in Production Capacity by Resource tab.

    The figure shows the Planning View results as mentioned in the step of the exercise.

Task 9: Reset the Changes

Steps

  1. Reset all the storage resources to unconstrained.

    1. Choose Master Data Workbook.

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

    3. Filter the Resource ID column by S##.

    4. Make the following changes: Remove the Constraint Type.

      The figure shows the Master Data Maintenance as mentioned in the step of the exercise.

    5. Choose Save Changes.

    6. Exit the Master Data Excel.

  2. Remove the minimum resource utilization values for production line 2 in location 1000.

    1. Choose the Production Capacity by Resource tab.

    2. In the minimum capacity usage for WT-L##_1000_002, from the 8th day remove the minimum capacity usage and the minimum capacity usage violation cost rate.

      The figure shows the Planning View results as mentioned in the step of the exercise.

    3. Choose Save Data.

  3. Remove the deactivation of product T-F4## for production on Line 1 in location 1000.

    1. Choose the Master Data .

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

    3. Filter the Source ID column by T-F4##_1000_0001.

    4. Make the following changes: remove the X that was placed earlier to make it invalid.

      The figure shows the Master Data Maintenance as mentioned in the step of the exercise.

    5. Choose Save Changes.

Learning

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