Outlining Supply Chain Planning at a Glance

Looking back in the history of SAP, Supply Chain Planning consisted mainly of one or more of the following components/solutions:

• SAP ERP/ECC and/or SAP S/4HANA
• SAP SCM, including SAP Advanced Planning and Optimization (SAP APO)
• SAP Business Information Warehouse (SAP BW)

The SAP SCM system contained several other components as well. In addition to SAP APO, there were for example SAP Event Management and SAP Supply Network Collaboration (SAP SNC).

These days, SAP Integrated Business Planning (SAP IBP) is the strategic component for (long term) supply chain planning within SAP. Since this course focuses on PP/DS however, SAP IBP is not discussed.

Solutions like SAP SCM are mentioned here, since PP/DS was also part of this SAP SCM solution. And the core interface (CIF) is still (to some extend) used when planning with SAP S/4HANA PP/DS.

Demand Management is the management of independent requirements. The behavior of independent requirements in material requirements planning (MRP) - for example, whether they are effective, or whether they consume other requirements - is determined by their requirements type or by the planning strategy.

Planned independent requirements are stock requirements that can be derived from a forecast of future demand. In make-to-stock production, you want to start procurement of the affected materials without waiting for specific sales orders. On the one hand, this kind of procedure allows you to reduce delivery times, while on the other hand, you can use forecast planning to spread the burden as evenly as possible across your production resources.

Sales orders (customer independent requirements) are created in Sales and Distribution. Customer requirements can enter MRP directly, depending on their requirement type. This is always desirable if you want to plan for specific customers.

If you want to plan material requirements automatically, you must define suitable MRP and lot-sizing procedures in the material master. To do this, use the MRP type and lot size indicators. Depending on the procedure you choose, you then have to maintain further data in the material master. You can define different MRP procedures for a material in different plants.

The two main planning procedures are consumption-based planning and material requirements planning.

Consumption-based planning is based on historical consumption values and uses forecasting or statistical procedures to determine future requirements. Consumption-based planning is characterized by its simplicity and is mainly used for B and C parts with a low value. One prerequisite of consumption-based planning is efficient and constantly up-to-date inventory management.

In contrast to consumption-based planning, material requirements planning takes current and future sales as a reference point and is executed for the whole BOM structure. The planned requirement quantities trigger the MRP calculation. It produces better planning results than consumption-based planning.

In the first step for detailed planning in MRP, the procurement dates and quantities for the required assemblies and components are determined based on the requirements dates and quantities for the finished product (for example, a sales order). Bills of material and routings must be exploded to perform this task.

Scheduling of procurement for in-house products is carried out using the routing. The production operations to be executed and the length of the individual operations are specified in the routing and calculated based on the formulas in the work center. The assemblies (from the BOM) required for production must be available when production of the finished product is started. Procurement of these assemblies must therefore be initiated earlier. In this way, assuming the dependent requirements date is the availability date, the system determines the order dates of the components by means of backward scheduling using the in-house production time or planned delivery time.

The figure shows that the world around us is becoming more complex. There has been an exponential growth of digital information (social, mobile, and big data), an increase of globalization and the spread of business networks, the Internet of Things, and the adoption of (business) Artificial Intelligence (AI). These changes have resulted in different business processes, often more complex organizations, and often more complex software solutions.

At the end of 2009, 5% of the world's population owned smartphones. Four years later, that figure jumped to 22%. Currently, there are between 7 and 8 billion mobile users in the world. And at the end of 2025, more than 20 billion devices will be connected to the Internet of Things, creating a digital network of virtually everything. In addition, cloud computing also grew exponentially in the same timeframe. In 2024, 46% of enterprises have workloads in the public cloud.

The exponential proliferation of mobile devices, social media, cloud technologies, and the staggering amounts of data they generate, have transformed the way we live and work.

While all of these advancements have improved our lives and provided us with greater opportunities for innovation than ever before, they have also accelerated the rise of an entirely new problem to contend with: unprecedented and crippling complexity.

The world may be getting smarter, but it is not getting any easier.

The figure shows how the SAP solutions for CRM and Customer Experience (CX) support the customer area, while the supplier area is supported by Concur, SAP Ariba, and SAP Fieldglass.

In terms of workforce, you find the SAP Fiori, SAP Fieldglass, and SAP SuccessFactors solutions. Finally, all solutions are also supported by the SAP HANA platform.

SAP S/4HANA is a different product to SAP ERP (ECC). With SAP S/4HANA, SAP has built on the success of the SAP Business Suite, powered by SAP HANA. Now, SAP S/4HANA is positioned as Cloud ERP within the larger context of the SAP Business Suite (as introduced in 2025).