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In modern supply chain management ERP is used for transactional data while tools like Advanced Planning and Optimization is used for forecasting, planning, scheduling and confirmation. Further, in processes such as production planning there is a technique termed SNP optimizer. This is used for calculation of costs and Total cost is calculated as the sum of Delay cost, Non-delivery cost, storage cost and production cost. An ERP-enabled Supply Chain Process helps the organization to create a supply chain that is reliable, flexible and responsive. It also enables in enhancing the visibility across the supply chain.
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Impact of ERP on Supply Chain effectiveness
Shailesh Harsora
Agenda• Usage of ERP for transactional data• Usage of APO for forecasting, planning &
scheduling and Confirmation.• Integration of SAP/APO for end to end
integration of Demand-Supply.• Usage of Business Intelligence for Analysis
Supply Chain complexity:
3
Suppliers Manufacturers Warehouses &Distribution Centers
Customers
Material Costs
TransportationCosts
TransportationCosts Transportation
CostsInventory CostsManufacturing Costs
Inbound Logistics PLANT Outbound
Logistics
SUPPLIERS
3PL 3PLFixed Schedules,Supplier Kanban.
CUSTO
mer
Demand Chain
SRM R3 & SCM DMS & CRM
SUPPLIERS
CUSTOMERS
The Integrated Demand Chain
SAP
SAPSCM (APO)
APO (Advanced Planning and Optimization) It offers planning and optimization functionalities in different
business processes of • Demand Planning & Forecasting• Supply Net work Planning• Production Planning Detailed Scheduling• Global Available to Promise (GATP)• Transportation Management
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System Tool
Supply Network Planning (SNP)
Demand Planning (DP)
Production Planning (PP)Detailed Scheduling (DS)
IT Solution
Dealers Forecast
Monthly/Weekly /DailyDespatch & Production
plan
Weekly day wise planning and sequencing
Global Availability To Promise (GATP)
Delivery Commitment to customer
Business Requirement
Demand Planning & Forecasting
• This module helps demand forecasting thro collaboration with customers.
• Geographical, product and business hierarchy can be configured for facilitating collaborative forecasting.
• It also provides statistical tools for demand forecasting.
Demand Planning & Forecasting
• Demand Capturing1. Direct & Indirect Orders from Customers2. Demand based on Forecast
• Demand Propagation1. Sales orders Creation2. Stock transfer Order(STO) creation3. Multi Plant Demand distribution scenario
Supply Network Planning
This module can be used for • Demand Propagation• Network optimisation • Distribution planning (Deployment)• Production planning
Supply Network Planning
Procurement planning
Production planning
Network planning
Planning Processes in SNP module
Supply Network PlanningDemand propagation on plant
Procurement planning
Production planning
Network planning
Stock Yard1
Dealer-1 Dealer-2
Stock Yard2
Dealer-3 Dealer-4
Plant
Dealer-6
Dealer-5
Ex plant Billing Ex warehouse Billing
Stock normsTr. Lead time
Supply Network Planning
Network Planning-Demand Propagation
Procurement planning
Production planning
Network planning
Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri06/02 07/02 08/02 09/02 10/02 11/02 12/02 13/02 14/02 15/02 16/02
StockYard D1 reqmt 5 5 5 5 5 5 5D2 reqmt 3 3 3 3 3 3 3Stock 6NetReqmt 2 8 8 8 8 8 8
Reqmt on plant 26 8 8 8 8 0 8 8 8 8
Target Days supply 3 DaysTransit Lead time 3 Days
Supply Network Planning
Procurement planning
Production planning
Network planning
Planning Processes in SNP module
Supply Network Planning
Procurement planning
Production planning
Network planning
Production Planning horizon
SNP Planning Horizon (4 months)
W1 W2 W3 W4 M1 M2
PPDS Plan orders
SNP Plan orders
SNP Production Horizon,Where SNP will not plan
being a frozen period.
PPDS planning Horizon of 3 weeks for RFD. Every week, 3rd week SNP
plan will be converted to PPDS plan
– Hard constraints- thru Work centers mapped in SAP
• Resource capacity, currently TCF line
• Aggregate hard constraints like engine, Axle & Transmission
• Supplier hard constraints
– Soft Constraints- thru MRP master data updation in SAP
• Parts can be arranged with lead time, which will consider the availability
like stock, expected receipts (Schedule lines on time lines)
How constraints are defined?
Production planning
• SNP Optimizer• Capable To Match(CTM)
SNP Optimizer
• SNP Optimizer is a method of planning where in there are costs attached to all orders (delay, non-delivery, storage and production costs). The optimizer tries to plan orders by minimizing the overall total cost. It uses linear programming logic for optimization
Total cost = Delay Cost + Non-Delivery Cost + Storage Cost + Production Cost
Capable To Match(CTM)
• CTM is a method of planning where the SAP plans as per priorities given to orders (e.g. FIFO of Ordering date)
• CTM is Multi-level Finite order based planning
Supply Network Planning
Procurement planning
Production planning
Network planning
Production Planning:
Objective- To meet the demand by producing vehs as close to the
demand. Minimum delay if capacity < Demand. Model prioritisation in case of Capacity or Material
constraint. Build ahead considering future high demand for selected
models indicated by Marketing.
Supply Network Planning
Procurement planning
Production planning
Network planning
Production Planning by SNP optimiser Resource constraints Component availabilityCost Modeling like
Storage cost Delay cost Non delivery cost * Production cost
(All cost are the relative costs)
* Also termed as Acquisition Cost and has intangible benefit or Loss depend on Product demand and customer profile Hence it is most significant cost element
Supply Network Planning
Procurement planning
Production planning
Network planning
Production Planning: SNP optimiser-
Works on the principle of reducing total cost where,
Total cost = Sum of {Non Delivery (ND)
+ Delay cost (DC)
+ Storage cost (SC)
+ Production cost (PC)}
SNP optimiser uses linear programming to solve the above equation. A comprehensive cost model is developed to meet business requirements.
Supply Network Planning
Procurement planning
Production planning
Network planning
Planning Processes in SNP module
Procurement planning
Production planning
Network planning
Supply Network Planning
Procurement planning
Production planning
Network planning
Procurement planning…Component planning is based on Production plan• Netting off the stock and expected receipts (Schedule lines/open PO)• In transit stock based on ASN• Planned Lead time• Lot size, safety stock norms• Fresh purchase requisitions will be generated
• Convert SNP plan orders to PPDS plan orders as per rule based
sequencing.
• It generates time based sequence which can be used for JIT supplies
• PPDS Plan orders flows to R3, (can be used for MRP)
• Actual production as per PPDS plan orders
• Backlog run for aligning the variation/loss of production.
PPDS activities
GATP (Global Availability to Promise)
BOP (Back order Processing)• This module matches the Requirements with
Receipts elements based on business rules.
• It provides confirmation dates to firm demand based on the stocks and plan orders.
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PROCESS FLOW CHART
CustomerOrder
Dealer’sOwn Stock
and Confirm
POs
Dealer CreatesP.O./ OTF
Triggering of S.O. in R/3
Stk. YardReceipt +
Stock
No
Dealer’s Delivery DateCommitment.
Yes
Yes
GATP CHECK
Dealer to formalise his
forecast in next weekly planning
run
System to create recpt and
update SO / STO
no
Business Inteligence
• The SAP BW Business Intelligence provides flexible reporting and analysis tools for strategic analyses, operational reporting, and decision-making support within a business. These tools include query, reporting, and analysis functions.
• As an employee with access authorization you can evaluate past or current data on various levels of detail, and from different perspectives, not only on the Web but also in MS Excel
BW Dashboards
Supply Chain Process with ERP• Supply Chain Reliability• Supply Chain Responsiveness • Supply Chain Cost• Supply Chain Flexibility• Supply Chain Visibility
Agile Customer Centric Supply Chain
Thank You
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