High Level Overview of APO

Demand Planning
Agenda
1) Introduction to SAP SCM - APO
Demand PIanning
2) APO Demand Planning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
Demand Planning is part of APO
IobaI AvaiIabIe-to-Promise
Demand PIanning
SuppIy Network PIanning
Production PIanning &
DetaiIed ScheduIing
Advanced PIanning & Optimization
Transportation PIanning &
VehicIe ScheduIing
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Synchronize suppIy with demand in your
gIobaI suppIy chain by baIancing push and
puII network-pIanning processes and by
handIing repIenishment and production
based on actuaI demand.
APO DP: mproves the forecast quality and
planning accuracy
APO SNP: mproves visibility across your global
supply chain and lowers inventory
APO PP/DS: Supports you in creating optimized
production plans
APO gATP: Allows state-of-the-art sales order
confirmation planning processes
APO TP/VS: Optimizes transportation loads and
minimizes transportation costs
APO Alert Monitor: Powerful exception message
system integrated in all APO planning modules
PIanner's KnowIedge
Task-specific pIanning tooIs
Flexible views
Graphics
Promotional planning
Life cycle management
Cannibalization
Accuracy reporting
StatisticaI Methods
MuIti-modeI approach
Average models
Exponential smoothing
Causal factors
Trend dampening
Model combination
Pick best
Demand PIanning Data Mart
Anticipation of
Future Demand
Information
CoIIaborative
forecasts
Order & shipment
actuaIs & history
Cost
POS data
NieIsen / IRI data
...
APO Demand Planning
Overview
APO DP (Demand Planning)
Comprehensive forecasting tooI-set
StatisticaI forecasting with causaI
and time-series methods
SeIection of best-fit modeI
Automatic outIier detection avaiIabIe
HighIy configurabIe pIanning books
with macro functionaIity
Supporting aggregation /
disaggregation Iogic
LifecycIe pIanning
PIan promotions separateIy from the
rest of your forecast
Track & monitor forecast accuracy
SeasonaI pIanning
CoIIaborative demand pIanning
Improved forecast quaIity
One tooI for power and business user
ConsoIidated demand pIan (different
regions, countries, departments, .)
Key Benefits Features
CaIcuIate and determine future
demand to improve demand
quaIity and accuracy
Typical DP Planning Cycle
8ense
&
Respond
Compare and evaIuate
different scenarios
Import reIevant master and
transactionaI data (e.g.
historicaI data)
enerate forecast & appIy
Iife cycIe management
Review finaI demand pIan
PIan promotions and/or
other events
ReIease finaI demand to
APO SNP or SAP ERP
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3
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AnaIyze and prepare data
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ollaborate
8imulate
Agenda
1) ntroduction to SAP SCM APO
Demand Planning
2) APO Demand PIanning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
;0Cache
Rep./ReI.
Time Series
Orders
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Rep./ReI.
Time Series
Orders
APO BW
DP Input Data Cube
DP Back-up Cube
DP Remote Cube
DP Metrics Cube
PIanning Area /
PIanning Books
Data Warehouse /
Business Warehouse
Enterprise AppIications
APO Live Cache
SCM 2007
APO DP Leverages standard SAP interfaces
APO Demand Planning Framework
Characteristics
Product Hierarchy: Product, category, brand etc
Customer Hierarchy: Customer, Customer Group, Sector, Channel etc
Location Hierarchy: DCs, Regions etc
Other attributes relevant for demand planning
Key Figures (Data rows)
Order History, Statistical Forecast, Budget etc
Characteristic-VaIue-Combinations (CVCs, Intersections)
Unique combinations of characteristics for which the data is stored and
planned
Also called at intersections
Configuration
Calendar, Bucket profiles
Planning-Object-Structure, Planning area, Planning book, Dataviews
Master Data
CVCs
Like profiles, Like Models, Forecast Profiles
PIanning Data
APO DP Terminology
Demand Planning Structure
Overview
Agenda
1) ntroduction to SAP SCM APO
Demand Planning
2) APO Demand Planning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
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3
5
6
7
nteractive Demand Planning
TooIbar
customization
SeIection IDs
Navigation Path,
DriII-downs
Key-figures,
dispIay/hide
Pivot sorting
Switch of CoIumns
& Rows
Activate /
Deactivate notes
Save CoIumn width
Bottom Up/Top
Down - Aggregation
/ Disaggn.
CaIendar
Unit-of-Measurers
1
2
3
4
Notes Management
DP aIIows pIanners to store and manage notes reIated to
business events
nteractive Demand Planning
When a user changes data in the system, the system locks
this data. This prevents other users from changing the same
data simultaneously and causing data inconsistencies
Locking capability is available at following levels:
Aggregate lock
Detailed lock
Live cache lock
Key-figure specific lock
DP ensures data consistency through Data Locking
Data Locking
nteractive Demand Planning
Usability
Graphical and/or table view
Calculate total, mean for selected cells, columns, cells in past, cells in future
Pivot sorting
Switch Rows/Column
Graphical and/or table view
Distribution Function
Equally spread a lump-sum value of selected cell range
Proportionally spread a lump-sum value over a selected cell range
A specific value can be added or subtracted to existing values of selected cell range
User can download planning book data onto desktop, make changes and upload
modified data
Apply a trend line in graphic view
Create a straight line between two selected points, in a graphical view
Hide lines
DP provides muItipIe Ievers to view and manipuIate data
nteractive Demand Planning
Multiple Calendars and Unit of Measures
Allows users to change the calendar with single click
Weekly, Monthly, Fiscal Periods, Quarters, Years
Telescopic, e.g. First quarter in Weeks, Second and third quarter in months, and rest
in quarters
User can see the data in different units of measures
WeekIy View
FiscaI Period View
nteractive Demand Planning
Disaggregation / Top-down Planning
2,469 = 75% of 3,274
805 = 25% of 3,274
nput entered at
Category IeveI
Aggregated View
Results displayed
Product IeveI
DetaiI View
UnderIying
Proportions
DP supports reaI-time top-down pIanning
nteractive Demand Planning
Aggregation / Bottom-up Planning
nput entered at
Customer, Product
DetaiI View
nteractive Demand Planning
Aggregation / Bottom-up Planning.
Roll-up of the input at
AII Customer
Product IeveI
Roll-up of the input at
AII Customer
Category LeveI
DP supports reaI-time bottom-up pIanning
nteractive Demand Planning
nteractive Planning - SAP
Chart Engine
Use graphs and charts to represent data in
visuaIIy perspicuous way
raphs with data manipuIation possibiIities
Use high fIexibiIity in customizing and
capabiIity of dispIaying more chart types
Objective
Create a demand plan by integrating
all available information
Collaborative process to gain "one
number consensus from sales,
marketing, operations
Combine various data:
Forecast
Promotions
Budgets, sales plans, etc.
Manual changes
Consensus Demand Planning
Macros
Use advanced macros to perform
compIex caIcuIations quickIy and
easiIy.
APO system comes with exampIes of
the use of macro functions and
operators
Macros are executed either directIy by
the user in interactive pIanning or
automaticaIIy at a predefined point
in time during a background job.
Alert Management
Alerts are communicated to
the user by:
Visualization in the alert monitor
Mail
SMS message
AIerts can be customized user specific
AIerts are triggered during pIanning run or interactive pIanning for:
Forecast errors exceeding borders defined by the user
Any kind of check carried out by a macro
Agenda
1) ntroduction to SAP SCM APO
Demand Planning
2) APO Demand Planning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
Univariate Techniques AIIows to forecast foIIowing time series patterns:
Constant
Trend
Seasonal, Seasonal trend, seasonal linear regression
Linear regression
Automatic model selection
Manual model selection with test for an additional pattern
Copy History
Sporadic
Causal / Multiple-Linear-Regression Assumes that the future saIes of a particuIar
product or service are cIoseIy associated with changes in some other variabIe (s).
For a business there can be various variabIe (s), Iike:
Promotion Spending - f 50,000 dollars spent on promotions, in past, on various
occasions resulted in a promotional lift of 5,000 Units/Month, then how much lift will
derive from planned spending of 75,000 this season?
Dependent SaIes Also called as attach rate analysis. f it is assumed that sales of
dryers is dependent on sales of washers then for the given forecast of washers what
would be the dryers sales forecast?
%703/
%20
8,08
%20
$,08
%20
8,08
%20
Statistical Modeling Techniques
Statistical Modeling Techniques
SaIient Features
Outlier correction
Median Method
Expost Method
Forecast accuracy measures supported in DP
Mean absolute deviation (MAD), Error total (ET), Mean absolute percentage error
(MAPE), Mean square error (MSE), Square root of the mean squared error (RMSE) ,
Mean percentage error (MPE)
R square, Adjusted R square, Durbin-h, Durbin-Watson, T-test , Mean elasticity
Adaptive Modeling DP supports automatic seIection of best forecast settings (modeI
and parameters) using foIIowing techniques:
Generate profile and assign it . Automatic adaptation of Seasonal, Trend, Linear factors
Generate new profile on error Assign diagnostic group, and if the measure of error
exceeds, systems assigns a profile
Best-pick System evaluates user defined models for a run and saves the forecast
based on the model that generated least error. User defined the cut-off and method for
measuring error
DP aIIows pIanners to set controIs for statisticaI modeIing
Agenda
1) ntroduction to SAP SCM APO
Demand Planning
2) APO Demand Planning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
Product Life Cycle Planning
Product Life Cycle Planning
Product Life Cycle Planning
Agenda
1) ntroduction to SAP SCM APO
Demand Planning
2) APO Demand Planning Framework
3) nteractive Demand Planning
4) Statistical Modeling Techniques
5) Product Life Cycle Planning
6) Advanced Demand Planning
Strategies
Promotion Planning allows planners to
Compare the unpromoted forecast with the promoted forecast.
Correct sales history by deducting from it past promotions, thus obtaining unpromoted
historical data for the baseline forecast.
Forecast baseline and promotion demand separately
Model cannibalization groups and promotion attribute types
Promotion Planning
Forecasting with Bill of Materials
You can forecast dependent requirements in Demand
Planning. The system determines the component parts of
finished products through the production process model
(PPM) or the production data structure (PDS).
This can be useful if material components represent
practical constraints on the forecast at finished product
level; that is, the available quantity of components is fixed
but they can be used in different finished products.
Extend the planning process to the dependent demand
Enables to plan all the components of a product which have
limited supply, are particularly expensive, have long lead
times, are otherwise critical in the supply chain (e.g. for
instance cause transport problems)
Forecasting with Bill of Materials - AIIows the demand pIan for finished products to be
expIoded to components
WaterFiIter
1 Unit
WaterF-Base
1 Unit
WaterF-Accessory
2 Units
Forecasting with Bill of Materials
My Company
Demand,
Inventory levels,
Forecast
Key Customers
Forecast
Promotions
PLAN
Re-PLAN
Collaborative Demand Planning
Share information & pIans with partners via internet
StreamIine work process and benefit from a more accurate
forecast, better market transparency and better communication
ConsoIidate severaI pIans to create one consensus pIan
Support negotiation process