Supply protection (SUP) is used to protect a group against the demands of other groups.
In many cases, companies do not want to sell their products according to the sequence of the incoming sales orders. Rather, they want to reserve certain quantities for special groups and perhaps they also want to assign priorities to these groups.
The aim of supply protection (SUP) is to protect quantities of a material and to prioritize the demand.
A typical example is the fashion industry. Here, sales orders from wholesale customers will come very early in the season while sales orders from the fashion company's own e-commerce channel will only come later. However, margins are typically higher for e-commerce and for strategic reasons it might be important to always have at least a minimum quantity available for every channel. At the end of the season, it is no longer relevant to protect demand. Therefore, at the end of the season, a first-come, first-served principle is common practice.
Supply protection can be in the form of core (horizontal) protection where complete groups are protected against each other, or in the form of prioritized (vertical) protection where every group is only protected against the demand of a group with a lower priority. Core and prioritized protection can be combined.
A protected quantity is always defined for the combination between a material and a plant as well as one or more characteristics. The characteristics are typically attributes of the sales order or of the customer and can be assigned via a characteristics catalog.
Prerequisites/Activation of Supply Protection
Only if supply protection is activated in the scope of the availability check for the related checking rule, will the product availability check consider supply protection for the specific material.
Supply Protection Object
The Supply Protection Object is the main entity of supply protection.
It is the central element for defining supply protection. It is unique and applies to a specific material-plant combination. It has a planning horizon that defines the period of time during which the defined quantities are protected. It also has a planning context that defines whether the protection applies to sales orders or to stock transport orders. There are multiple supply protection objects possible for the same material-plant combination, but the assigned characteristic value combinations (CVCs) make the supply protection object unique.
A supply protection object consists of one or more supply protection groups. In principle, every supply protection object with only one protection group represents a core (horizontal) protection. If there are more protection groups (prioritized CVCs) assigned to the supply protection object, there is also a prioritized (vertical) protection within the supply protection object. Only if the supply protection object is active, will it be considered in the logic of the product availability check (PAC).
Activation
Whenever quantities of a material are protected by means of a supply protection object, this protection has a special time horizon during which the protection is valid. It is also possible to distribute protected quantities for defined periods (time buckets). However, the supply protection object will only be taken into account if it has the status Activated. This affects both the protection and the restriction. Only if the supply protection object is active will it be considered in the logic of the product availability check (PAC).
The supply protection object can have the status In Planning, Activated, or Deactivated. You cannot switch the status from Activate to In Planning or from Deactivated to Activated again.
Note
Once a supply protection object has the status Activated, only the protected quantities can be changed. Changes regarding characteristics, planning horizon, or planning context are not possible. It is only possible to change the status from Activated to Deactivated.In addition to activating a supply protection object, you also need to activate supply protection in the scope of the availability check. Only if supply protection is activated in the scope of the availability check for the related checking rule, will the PAC logic consider supply protection at all.
Core Supply Protection
Core supply protection is a supply protection variant.
With supply protection, you can completely protect one group against the demand of another group. Every supply protection object represents such a core supply protection. If every group is protected, this means that a demand has to consider the protection of these groups. If there is, for example, a protection of different markets, such as Germany, France, and the UK, for a sales order from Germany, the system first has to check if there is a protection for other groups (France or the UK). This protected quantity is restricted for a demand from Germany. Only if there is enough stock left, can the sales order be confirmed.
You can define a maximum of two characteristics as core characteristics. These characteristics and their values are also visible on the search page of the Manage Supply Protection app and help to identify supply protection objects.
The calculation of restrictions is the central element of supply protection. In addition, sales orders, stock transport orders, and so on, that do not match a protected group have to take the protection of other groups into account.
Within a supply protection object you can also define prioritized protection groups.
In our scenario, we want to protect supplies for the customer T-S50A25 and T-S50B25, both based on Delivery Priority 01 and 02, as well as a general protection for all other customers with different delivery priorities. This protection Group has to be defined using # as the wild card.
Calculation of Restricted Quantity
For all supply protection objects with the same material-plant combination, the restriction works both ways. This means that a demand element matching a protection group of a supply protection object must automatically respect the protection for all other activated supply protection objects of the same material-plant combination. For the calculation of the restriction, only time buckets with an end date in the future are relevant. Time buckets in the past are expired and thus no longer relevant. The consumption of protection also reduces the restriction.
In addition to the restriction between different supply protection objects, the restriction within a single supply protection object has to be considered. This will be handled using Prioritized Supply Protection.
Prioritized Supply Protection
Prioritized supply protection is a variant of supply protection.
Core (horizontal) protection is quite strict as there is no prioritization and every protection restricts other demands equally. Prioritized (vertical) supply protection, on the other hand, is more of a relative protection. In a prioritized (vertical) supply protection, protection subgroups with different priorities are defined. An order matching such a group has to take the protection of all defined subgroups that have the same or a higher priority into account. Lower priorities are not taken into account.
In case of a shortage of supply, a demand with a higher priority can order even more than the quantity protected for this priority, although there will be no quantity left for any other protected demand that has a lower priority. During the definition of characteristics for the prioritized supply protection, the assigned core characteristics are no longer available for assignment.
Supply Protection Group
Supply protection groups can be built by using combinations of characteristics and their values.
The supply protection group is also known as Characteristic Value Combination (CVC). It is the element for which the protected quantity is defined. A supply protection group belongs to exactly one supply protection object. In principle, a sales order can only be a match for one supply protection group of the related supply protection object. The protected quantity defined for this supply protection group can be consumed by this sales order. The protection of all other supply protection groups consists of restricted quantities from the perspective of this sales order.
The supply protection group can be divided into periods and can have a priority. If the supply protection object only consists of one protection group, this is a core protection (also known as horizontal protection). If there are more protection groups, these protection groups can also have different priorities. If this is the case, this is a vertical protection within the supply protection object.
Defining Time Buckets
Supply protection is used to protect quantities of materials for certain time periods.
The aim of supply protection is to protect quantities of materials for certain time periods. It might be useful to protect quantities for important groups (customers, regions, channels, and so on) at the beginning of the season. At the end of the season, protection is less important and a first-come, first-served principle is common practice to avoid non-sellers.
The consumption of the protection always takes place based on the time bucket that corresponds to the requested delivery date of the sales order. If the protection of a time bucket is not completely consumed, it will expire once it is in the past.
Every supply protection object has a defined planning horizon with a start and an end date. This planning horizon is the time range for which a protection should be maintained. You can also decide if you want to maintain protection only for one period or if you want to have daily, weekly, monthly, quarterly, or yearly time buckets.
A validation for the time buckets checks whether each time bucket has the correct start and end date (there must not be any gaps between the time buckets) and whether the protected quantity of the time bucket has a positive value. Furthermore, the validation checks that the number of time buckets does not exceed the maximum number of allowed time buckets.
On the Protection Group screen, there are two buttons: With the Generate Time Buckets button, you can create all time buckets for the current protection group based on the data of the supply protection object. With the Delete All Time Buckets button, you can delete all time buckets for this protection group.
Consuming Supply Protection
Reduction of the protected quantity by confirmed sales orders or stock transport orders.
If a demand element such as a sales order or a stock transport order is a match for a supply protection quantity via its combination of material, plant, and other characteristics, this quantity will be reduced by the quantity that has been confirmed for the demand element. Technically, the consumption of the supply protection quantity is stored independently from the protected quantity. The consumption in a time bucket can exceed the protected quantity. Consumption is the aggregation of all demand elements matching via their criteria with a certain time bucket of a protection group. The remaining protection of a time bucket is the result of the maintained protection minus the consumed protection. Only positive values are taken into account. Negative values are not considered.
For the calculation of the restriction, only the reduced protected quantity is considered. A confirmed sales order reduces the remaining stock, but also the remaining supply protection. The consuming objects with their IDs and object types (sales order, stock transport order, and contract) are visible in the details of the single time bucket.
If sales order items are canceled, rejected, or deleted, the consumption will be deleted and that the remaining protection quantity will be adapted accordingly.
Supported and Affected Document Types
Supply protection supports sales orders, stock transport orders, and contracts.
The following document types are supported by the active supply protection:
Sales Orders (SO)
Stock Transport Orders (STO)
Contracts
Active supply protection means that it is possible to maintain protected quantities for these document types. Passive supply protection means that the demand element has to respect the protection of other groups as a restriction.
Sales Orders
Supply protection usually protects the demand of customers. This can be done directly by the protection of a single sold-to party (as in our example) or by the protection of countries/regions to which the sold-to party belongs. It is also possible to protect a channel (or a delivery priority), and usually also here the demand elements are sales orders. Therefore, the support of sales orders is the default use case. The confirmed quantities of the sales order will consume the protected quantities in the matching time bucket of the requested delivery date.
Stock Transport Orders
In addition to the protection of sales orders, the active protection of stock transport orders is also relevant as, for example, also retail stores should be protected. Stock transport orders are the typical demand elements of retail stores. It is important to define supply protection objects that allow the protection of sales orders and stock transport orders together. If a customer wants to protect quantities for their channels, e-commerce, retail, and wholesale sales orders are the corresponding demand elements for e-commerce and wholesale, whereas stock transport orders are the corresponding demand element for retail.
Contracts
Although contracts cannot be selected as planning objects for the supply protection object, there is also an active protection for quantity contracts. Quantity contracts are treated like sales orders. They correspond to and consume the supply protection object defined for sales orders.
Call-offs from a contract are also like ordinary sales orders, but these sales orders are not restricted by supply protection as long as the call-offs do not exceed the quantity of the contract. However, there is a transfer of the consumption from the contract towards the call-offs.
Using Characteristic Catalogs
Characteristics can be assigned to supply protection groups.
The characteristics that can be assigned to protection groups are bundled in characteristic catalogs. These catalogs contain all valid characteristics that can be used for active supply protection. Active supply protection supports Sales Orders (SO) and Stock Transport Orders (STO). For both document types, a dedicated characteristic catalog is available.
A combined catalog is also available to protect both sales orders and stock transport orders – in one supply protection object.
In the Planning Context of the supply protection object, you can define which catalog is used. You can select either or both of the following:
- Sales Order
- Stock Transport Order
If you select Sales Order, the corresponding catalog for sales orders will be available for the selection of characteristics. If you select Stock Transport Order, the corresponding catalog for stock transport orders will be used. If you select both options, the mixed catalog will be used. This is not a separate catalog, but the intersecting set of characteristics from sales order and stock transport order catalogs.
You can use this app if the business role Order Fulfillment Manager (R0226) is assigned to your user.
Finally, the results of the Supply Protection can be also be reviewed by using the consumption chart from the detailed view of the supply protection group.
