Explaining the Key Features and Functionality of Supply Planning

Your organization needs to be able to create plans for its entire supply chain network while meeting a number of business needs. Using customer demand as the starting point, you can use supply planning algorithms in IBP to calculate the flow of products through your supply chain to satisfy demand.

In some cases, an unconstrained plan can be generated as a background job and used without any manual intervention.

In other cases, the plan must be tightly constrained or optimized. This often requires significant manual planning and may require several iterative steps.

Either way, different constraints and planning data are taken into account according to the settings planners maintain. As a result, algorithms calculate which locations in your supply chain can supply the product to the customer and how much each location can supply in each period of your planning horizon.

The algorithms propagate customer demand through the supply chain in an upstream direction (for example, from customer to distribution center, from distribution center to plant). The product receipts are then transferred back through the network in a downstream direction and the product is supplied to the customer (for example, from plant to distribution center, from distribution center to customer).

The resulting plan includes all material flows to customers from plants and suppliers through distribution centers or other intermediate locations, and includes all production processes.

When setting up a system that facilitates supply planning in the organization, the starting point is the development of the planning model that describes the structure of a plan in terms of data and calculations. It defines how data is stored, calculated, and aggregated in the system. From a technical perspective, a planning model is a collection of master data and time series data that is organized in dimensions and enhanced with specific calculations.

A subnetwork is a subsection of the overall supply chain network for which a planner is responsible or that the planner wants to plan in a separate planning run (for example, all location products in a particular region or all location products in a particular product group).

Similar to the master data model for the entire supply chain network, a subnetwork consists of nodes (that is, location products) and arcs (which are used to model the transport links between the location products). You define the subnetwork to which a location product belongs in the location product master data. You can define subnetworks for product groups or regions, or for any other property of locations, products, or location products.

When supply planners start a planning session, they select one or more subnetworks that are to be taken into account by the planning algorithm. This defines the set of location products that are to be planned. Visibility filters can be used to define which location products and subnetworks a user is allowed to display and change.

SAP provides a number of standard supply planning operators. You can create a plan for your supply chain network using the following time-series-based supply planning algorithms:

• Supply planning heuristic, to create an infinite supply plan without shortages in which all demands are fulfilled regardless of available supply.
• Supply planning finite heuristic, to create a priority-based finite supply plan in which demands are fulfilled depending on available supply.
• Supply propagation heuristic, to create an infinite supply plan in which only the available supply is propagated downstream through the supply chain.
  Note

  As of SAP IBP for Supply Chain 2005, the time-series-based supply propagation heuristic is no longer available for customers on newly installed SAP IBP systems. As a customer upgrading to 2005 who has already used the supply propagation heuristic in previous releases, you can continue using it.
• Shelf life planning heuristic that takes the shelf life of products into account when creating a supply plan (infinite without shortages).
• Supply planning optimizer, to create a finite cost-optimized supply plan.

All of these models can successfully calculate the flow of products through your supply chain to satisfy demand, but the results will vary depending upon the data and the algorithm that you choose.

For example, the unconstrained Heuristic generates receipts that exactly match demand, without any consideration of constraints. This will create an infinite demand and supply plan with no shortages, based on defined sourcing ratios (quotas) for customers, locations, and production. The output not only helps planners find bottlenecks where resources have a utilization of more than 100%, but also calculates capacity necessary to meet the unfulfilled demand. The downside, though, is that the plan may not be feasible.

On the other hand, the Finite Heuristic and the Optimizer aim at fulfilling the demands as far as possible under the given constraints (finite capacity planning). The benefit of finite capacity planning is that it creates a feasible solution, but the plan may contain late-deliveries and non-deliveries.

All algorithms consider inputs such as costs or capacities according profile settings, and all of these can be run interactively or in batch mode in the background. Either method can be triggered from the Microsoft Excel front end, typically used by planners.

When you change inputs, you may want to see how your changes affect the supply plan before actually saving the data. You accomplish this in Microsoft Excel by running the planning algorithms in simulation mode.

Any planning operators that support interactive planning can be accessed from the Simulation menu in Microsoft Excel. It uses the planning unit (subnetwork) restrictions within the current planning view.

After simulation, the new data can be discarded by choosing Refresh, or saved via the Save Data icon.

This function is very useful for interactive planning and "what if" testing.

Any error messages are displayed on the screen. The job log for the last simulation can be accessed by the Show messages option in the menu.

You can also run the planning algorithms in Microsoft Excel in batch mode.

Any planning operators that support batch mode can be accessed from the Application Jobs menu in Microsoft Excel.

Choose S&OP Operator → Run.

If any planning units (subnetworks) have been assigned to location or products in your planning area, specify which ones can be processed. Otherwise, you cannot execute planning.

Once the supply planning run is triggered, it may take a few minutes to complete, depending on how frequently the batch processes are scheduled.

To review its status, choose S&OP Operator → Status.

Any planning operators that support batch mode can be scheduled from the Application Jobs menu in Microsoft Excel.

Choose S&OP Operator → Schedule.

Job Scheduling

Jobs can be scheduled to run weekly (any or all days), monthly, or yearly.

Fill out the entries on the Definition tab. These are the same entries that you needed to set for online processing.

To schedule the job, select your desired frequency and choose Add. The job appears in the Status list.