SAP Advanced Planning and Optimization (APO) supply network planning (SNP) helps to provide medium- or long-term planning or procurement of products to meet customer demand. SNP heuristics help to plan the constant flow of products through the entire network of the supply chain.

SNP provides three basic algorithms to integrate purchasing, production, distribution of demand, and transportation:
•    Heuristics
•    Capable-to-match (CTM)
•    The optimizer

SNP does cross-plant planning (i.e., plans for all sources of supply from the customer, through distribution centers to the plants and their suppliers). Different algorithms differ on the constraints that are considered, the way they make decisions, and on the level of aggregation at which they perform the planning.

Results of SNP heuristics help you to understand the amount of products that need to be purchased or produced from the medium- or long-term planning perspective.

An heuristics run does not take available capacity into account, so there is a possibility that it could generate an infeasible plan. If the heuristics run results in a capacity overload, it can be overcome with the help of a capacity-leveling process.

Figure 1 shows the high level steps that are performed in SNP.

Figure 1

SNP process flow

After an SNP heuristic run, we get constrained plan. This final plan is released back to Demand Planning to compare the original forecasted volume against the constrained plan.  Planners can adjust the forecasts accordingly. Note that the step of releasing the forecast back to Demand Planning is optional and it differs based on business requirements. It is also possible to skip this step and run Deployment/Transport Load Builder (TLB) directly.   Deployment helps in determining which demands can be covered by present supply. TLB is used to build stock transfers confirmed by deployment for various transport means and ensures that they are loaded to full capacity.

•    A multi-level heuristic run creates receipt elements for not only selected product at all locations but also, all the components of the selected product are also planned at all locations. This is basically the equivalent of a cross-location material requirements planning (MRP) run.

Low-level code helps the system to control the planning sequence. Low-level code is the lowest level at which product appears in a bill of material (BOM). This is particularly useful in network heuristics and multi-level heuristic as the system does cross location planning. Low-level code helps in determining the correct sequence of location products and then does the planning. To understand, consider there are two finished goods (FG): Materials FG A and FG B as shown in Figures 2 and 3 and their corresponding BOMs.

Figure 2

BOM of FG product A

Figure 3

BOM of FG product B

Figure 4

Low-level code

Figure 5 diagrams the supply chain network that has been considered for discussion in this article.

Figure 5

An example of a supply chain network

Master Data

Locations

In the initial screen that appears after you execute transaction code /SAPAPO/LOC3 (Figure 6), enter a name (e.g., PLANT1) in the Location field and a value for the corresponding location type (e.g., 1001) in the Location Type field. Click the Create button.

Figure 6

The Location Master Data initial screen

In the next screen (Figure 7), enter a description for the location (e.g., Production Plant – 1).

Figure 7

The Location Master Data header screen

Once a description has been entered for the location, navigate to the Address Tab and in the StreetAddress section, enter the country details (e.g., US) as shown in Figure 8. This data helps the system to allocate the correct time zone.

Figure 8

The StreetAddress section of the Location Master Data screen

Figure 9

The Calendar tab

After the calendar tab, you can also navigate to the resource tab as shown in Figure 10 and enter a handling resource. A handling resource is needed if you use goods receipt processing time in material master. Resource inbound would be used for goods receipt and resource outbound for goods issue.

Figure 10

The Resources tab

Once the required details have been added, click the save icon. Once the location has been saved, click the back icon to return back to the main screen. Then click the Assign Model button (Figure 11) to assign the location to the active model as shown in Figure 11.

Figure 11

Assign the location to an active model

After you click the Assign Model button, a pop-up screen appears (Figure 12). Enter 000 in the Model Name field to assign the location to active model 000.

Figure 12

Enter a model name

After you enter 000 in the Model Name field, click the assign objects to model icon as shown in Figure 13 and then click the enter icon (the green check mark beside it).

Figure 13

Assign the object to the model

Figure 14

Location master data added to model successfully

Products

Figure 15

The Product Master initial screen

In the next screen (Figure 16), enter a description in the Prod. Descript. field (e.g., Product-1) and a base unit of measure in the Base Unit field (e.g., EA, which stands for each). Once these details are defined, you can go to different tabs and assign important parameters as needed.

Figure 16

The Product Master header screen

Figure 17

The Lot Size tab

In the Lot Size tab, there are two different tabs – Procedure and Quantity and Date Determination – in which different fields are defined. Other important fields here are Minimum/Maximum Lot size, which means that lot size of the individual orders cannot be smaller or greater than the given value. Safety Stock and Safety Days’ Supply can also be maintained in the Lot Size tab. This data specifies the number of workdays over which the system has to take into account future demands when planning safety stock. All these important fields have been highlighted in Figure 17.

In the Procurement tab, you populate the Procurement Type field. The procurement type helps in determining how a material is to be procured. In the Procurement Type field you can enter E for in-house production (as shown in Figure 18) or F for external procurement.

Figure 18

The Procurement tab

In the SNP2 tab as shown in Figure 19, assign the SNP Demand Profile and SNP Supply Profile, or if there aren’t any defined, then fill in the different horizons. SNP does not create any planned orders in the production horizon and stock transfers in the stock transfer horizon. These are the two important horizons which are used in SNP Heuristics. Along with this, one can also define safety stock and safety days’ supply in the Lot size tab if needed.

Figure 19

The SNP2 tab

Once the required details have been added, click the save icon. Once the product has been saved, click the back icon to return to the main screen. Then click the assign model icon to assign the location to the active model (Figure 20).

Figure 20

Assign the location to the active model

Figure 21

Enter a model name

After you select Model 000, click the assign objects to the model icon and then click the green arrow icon beside it as shown in Figure 22.

Figure 22

Assign the object to the model

Now you see a screen that displays a message indicating that the assignment is made correctly (Figure 23).

Figure 23

Product master added to the model successfully

Figure 24

Assign the product to a planning version

In the pop-up screen (Figure 25), enter 000 in the Plng Version field to assign the product to active planning version 000. Then click the enter icon (the green check mark).

Figure 25

Assign the product to the active planning version

In the above steps, you created PROD-1 at PLANT1. Similarly, you need to create it at both the DC – DC01 and DC02. You also need to create product PROD-2 at PLANT1, DC01, and DC02.

Transportation Lane

Figure 26

The Transportation Lane initial screen

This action opens the screen shown in Figure 27. In the Means of Transport section, click the create icon. On the right side of Figure 27 note that truck is assigned to the Means of Trans. (means of transport) field. Note also the Aggr. Planning check box is selected as this field needs to be checked in order for SNP to take into consideration and consider it as a valid lane. In addition, I have selected the Valid for All Products check box to make this lane valid for both products. I also can define transport duration. After all the details are entered, click the enter icon (the green check mark) highlighted in Figure 27.

Figure 27

Create a means of transport

Select a product or products you want to assign to the lane and enter validity dates for these products in the Start date and End date columns. In my example, I select products PROD-1 and PROD-2 and assign them to this lane as shown in Figure 28. Note that it is important to define the validity dates for the product properly as these dates cannot be changed later. Therefore, it is important to define the end date accordingly for planning; otherwise, the planner would have to create a new product lane after the expiration of the old date.

Figure 28

Assign products to the lane

Click the save icon. You have now created the transportation lane. Similarly, you can follow the same steps as described above and create transportation lanes from PLANT1 to DC02 as shown in Figure 29.

Figure 29

The transportation lane

Resources

Resource master data is particularly useful for defining capacities (e.g., capacities of plants, machines, or warehouses) and resource-specific planning parameters in SNP, Production Planning and Detailed Scheduling (PP/DS), and CTM. In my example, I define bucket resources. SNP then uses bucket resources, as all the planning is going to be in period buckets.

After you execute transaction code /SAPAPO/RES01, the Resources screen appears. In this screen, populate the Resource, Location, and the Planning Version fields as shown in Figure 30. Then click the create icon beside the Resources button (the third button from the left).

Figure 30

The Resources initial screen

In the 1 Bucket tab of the next screen (Figure 31), enter P (production resource) in the Res. Categ. (resource capacity) field. In this tab you can also assign a Factory Calendar.

Figure 31

The 1 Bucket tab

In the next screen, click the SNP Bucket Cap. tab. Select an entry for the Period Type field (e.g., Day) and populate the other fields as shown in Figure 32. In my example, I entered a Bucket Capacity of 700 and a bucket utilization of 100 percent.

Figure 32

The SNP Bucket Cap. (capacity) tab

In the pop-up screen that appears (Figure 33), enter 000 in the Model Name field to assign the resource to Active Model 000. Click the assign objects to model icon and then click the enter icon (the green check mark).

Figure 33

Assign the resource to the active model

After you assign the resource to the model, the system automatically creates the resource for all planning versions in the system. You can click the Capacity Profile button in the Resource Master as shown in Figure 34.

Figure 34

The Capacity Profile button

Capacity Profile displays the bucket capacity definitions to validate the resource is set up correctly (Figure 35).

Figure 35

Capacity profile details

SNP plans in period buckets, so it aggregates the daily bucket capacity to calculate the total period capacity.

Note
In my example, I define daily bucket capacity of 700. This capacity would be used during capacity leveling.

Production Process Model (PPM)

To configure master data for a PPM, execute transaction code /SAPAPO/SCC03. This action opens the screen shown in Figure 36. In this screen, enter a name in the Plan field and click the Create button.

Figure 36

The production process model initial screen

In the next screen (Figure 37), enter a description for an operation (e.g., Car Assembly). The Operation Number column would be auto-populated with numbers (e.g., 0010 or 0020). Enter a description for 0010 and then double-click the operation number.

Figure 37

The production process model header screen

In the refreshed screen (Figure 38), enter a description for an activity (e.g., Assemble Car), activity type – P for produce. Double-click the activity number.

Figure 38

The production process model Activities section

In the next screen (Figure 39), you can enter the product that will be produced. The input/output type would be O for output product and I for input. This represents the BOM to produce the car. Enter a validity period for the production of the product. The units should always be EA, to match the units I set up in the bucket resource. The Variable consumption should always be 1 to represent consumption of 1 slot per car.

Figure 39

The production process model Components tab

Click the Mode tab (Figure 40). Enter a mode (e.g., 10) and enter the name of the bucket resource in the Primary Resrce (primary resource) column and the plant it will be built in under the Location column. Enter the unit as Day –all SNP orders look like they are a day long, as the objective is not to sequence the orders but to understand the consumption of capacity. Enter the fixed duration as 1.

Figure 40

The production process model Mode tab

Figure 41

Product plan assignment in the production process model

In the next screen (Figure 42), enter the planning location and enter the same location for the production plant (e.g., PLANT1). When you scroll on the right, the field for Maximum lot size shows up. Enter a maximum lot size (e.g., 99999).

Figure 42

The product plan assignment details in the production process model

In the pop-up screen (Figure 43), enter 000 in the Model Name field to assign the PPM to model 000.

Figure 43

Assign model 000 to the PPM

After you assign the model to the PPM, click the activate icon as shown in Figure 44.

Figure 44

Activate the PPM

After activation, you see a message that validates that the PPM is set up correctly and made active and ready for use by SNP (Figure 45).

Figure 45

Message validating correct setup of the PPM

In addition, instead of creating a new PPM, you can copy an existing PPM and change the required details as needed. To complete this step, execute transaction code /SAPAPO/SCC03. In the Choose Plan screen (Figure 46), click the Copy button.

Figure 46

Copy the PPM

In the next screen (Figure 47), enter the name of the new PPM to be created.

Figure 47

Create a new PPM using the copy option

This completes the setup of master data needed to execute SNP heuristics. Note that I have created all the master data manually in APO and assigned it to Active Model 000. However, this master data can also be created in ECC and then transferred to APO via CIF. The diagram in Figure 48 shows the mapping between master data objects between ECC and APO.

Figure 48

Master data mapping between ECC and SAP APO via the CIF

SNP Planning Book/Data View

Location Heuristics

Initially, you create demands for PROD-1 at location DC01 and DC02. In order to create Demands, execute transaction code /SAPAPO/RRP3. In the Product View screen (Figure 49), enter data in the Plng Version (planning version), Product, and Location fields.

Figure 49

The Product View screen

In order to create demand, go to change mode by clicking the pencil icon (Figure 50).

Figure 50

Go to change mode

In next screen (Figure 51), enter a Demand of quantity 100 at DC01 (To create a demand enter a negative quantity of 100 for a future date and press Enter).

Figure 51

Demand at DC01

Similarly, you create Demand of quantity 200 at DC02 as shown in Figure 52.

Figure 52

Demand at DC02

Now check in the SNP planning book to see how these are reflected. Execute transaction code /SAPAPO/SDP94. In the screen shown in Figure 53, select APO Location Product from the options available in the Show field. Enter data for PROD-1as shown in Figure 53. Click the green check mark icon.

Figure 53

Load data in the planning book

Figure 54

Demand at DC01

Figure 55

Demand at DC02

In the change mode, click the Location button as highlighted in Figure 56 to run the location heuristic at DC01.

Figure 56

Location heuristic at DC01

Similarly, you run the location heuristic at DC02 as shown in Figure 57.

Figure 57

Location heuristic at DC02

After running the location heuristics, you can see that corresponding receipt elements (purchase requisitions) of 100 and 200 quantities at DC01 and DC02 have been created as shown in Figures 58 and 59. You can also see that the source of supply for both these is PLANT1.

Figure 58

Receipt at DC01

Figure 59

Receipt at DC02

You can also see at PLANT1 in the Product View screen (transaction code /SAPAPO/RRP3) that a purchase requisitions release (Demands) has been created with the same purchase requisition number as at DC01 and DC02 as shown in Figure 60.

Figure 60

Demand at PLANT1 in the Product View screen

Now, in the interactive planning book in transaction /SAPAPO/SDP94, at PROD-1 PLANT1 level, you can see demand of 300 quantity (200+100 of each DC) is appearing as shown in Figure 61.

Now run the location heuristic at PLANT1 level and see the results as shown in Figure 62. Note that in order to run the Location Heuristics, you need to again go to change mode and then run Location Heuristics as explained earlier. This process is common and is used every time you need to run heuristics from the interactive planning book.

Figure 62

Location heuristic at PLANT1

After running Location Heuristics at PLANT1, you can see that the heuristic run has created SNP Planned Order of 300 quantities to fulfill the demand using the PPM at PLANT1 as shown in Figure 62. The same data is visible in the Product View screen (transaction code /SAPAPO/RRP3) also for PLANT1 as shown in Figure 63.

Figure 63

Receipt at PLANT1

Network Heuristics

Figure 64

Demand at DC01

Figure 65

Demand at DC02

Figure 66

Receipt at DC01

Figure 67

Receipt at DC02

Figure 68

Receipt at PLANT1

Similarly, you can see the receipt (planned orders) created at PLANT1 in the Product View screen (transaction code /SAPAPO/RRP3) as shown in Figure 69.

Figure 69

SNP Planned Orders at PLANT1

Multilevel Heuristics

Here product PROD-2 has one BOM component, RAWMAT-1, in the ratio 1:2, so to make 1 quantity of PROD-2, two quantities of RAWMAT-1 are needed. You can see this in PPM in transaction /SAPAPO/SCC03 as shown in Figure 70.

Figure 70

PPM showing BOM components for PROD-2

Again, for Multi-Level Heuristic you use the same supply chain network as shown in Figure 5. Here you use PROD-2 for simulation purposes as it has BOM components. Initially, demand is created for PROD-2 at both the DCs (DC01 and DC02).

Figure 71

Demand at DC01 for PROD-2

Figure 72

Demand at DC02 for PROD-2

Now you run a multilevel heuristic at DC01. Note again for running a multilevel heuristic, you need to go into change mode in the interactive planning book as discussed earlier in the “Location Heuristics” and “Network Heuristics” sections. To run the multilevel heuristic, you click the Multilevel button as shown in Figure 73.

Figure 73

Running a multilevel heuristic

After running the Multilevel Heuristic at DC01, you can see that it created receipt elements at all the DCs and the plant as well. Also, since you had one BOM (RAWMAT-1) for this product, a receipt element would be created for this too. Receipt created at DC01 is 100 as shown in Figure 74, receipt created at DC02 is 200 as shown in Figure 75, Receipt (planned orders) created at PLANT1 is 300 (100+200) as shown in Figure 76 and Receipt created at PLANT1 for RAWMAT-1 is 600 (300*2) as shown in Figure 77.

Figure 74

Receipt at DC01

Figure 75

Receipt at DC02

Figure 76

Receipt at PLANT1 for PROD-2

Figure 77

Receipt at PLANT1 for RAWMAT-1

Running Heuristics in Background

Instead of running heuristics interactively, there is another option to run it in the background via transaction /SAPAPO/SNP01 as shown in Figure 78. This is also useful when you are planning for a large number of products. Also here, users have the option to either give manual selection for products and location or they can use the selection profile that was created in the interactive planning book.

Figure 78

Running heuristics in background mode

Low-Level Code Determination

As discussed earlier, low-level code is used by the system to internally determine the correct planning sequence. This can also be executed via transaction /SAPAPO/SNPLLC as shown in Figure 79 by giving the required parameters for the product, location, and planning version. If you select the Whole Model option, then the system calculates low-level codes for the entire planning model. However, if you select the Temporary LLC Determination option, then the system calculates low-level codes for only a specified set of master data as given in the selection parameters.

Figure 79

SNP low-level code determination

Capacity Leveling

In this supply chain network as shown in Figure 5, if you increase the demands at both the DCs, this would result in more planned orders being generated at the plant level (PLANT1) as shown in Figure 80.

Figure 80

Demand and receipt situation at PLANT1

Now if you look at the capacity view planning book as shown in Figure 81, you can see if the plan is greater or less than available plant capacity and by how much.

Figure 81

Capacity view at PLANT1

Here the planner can run capacity leveling to level out the load across the periods to make the plan feasible. To run the capacity leveling, click the Capacity Leveling button (Figure 82).

Figure 82

Run Capacity Leveling

The heuristics-based leveling method compares the capacity load on the resource against the actual load for each period. Direction of comparison depends on the scheduling direction that has been selected as shown in Figure 83 (forward or backward scheduling). Once the system finds that the resource is overloaded, it selects all orders that are causing the overload in the particular period and then sorts these orders based on the priority defined, then moves them into subsequent or previous periods until the maximum resource capacity is reached. If no priority is defined in the profile, then a random priority is determined by the system automatically.

Figure 83

The Capacity Leveling profile

In my discussion in this article, scheduling direction is both forward and backward, so the overloaded quantity would be distributed in both directions. The result after running Capacity Leveling is as shown in Figure 84. Here you can see now that capacity utilization is not more than 100 percent in any of the periods, thereby generating a feasible plan.

Figure 84

Capacity Leveling results

Now, instead of scheduling the direction as forward and backward, if you choose only forward in the capacity leveling profile as shown in Figure 85, the results would vary as shown in Figure 86.

Figure 85

Forward scheduling in the Capacity Leveling profile

Figure 86

Capacity Leveling results

Table 2 is a comparison of heuristics, CTM, and the optimizer.

Alok Jaiswal

Alok Jaiswal is a consultant at Infosys Limited.

He has more than six years of experience in IT and ERP consulting and in supply chain management (SCM). He has worked on various SAP Advanced Planning and Optimization (APO) modules such as Demand Planning (DP), Production Planning/Detailed Scheduling (PP/DS), Supply Network Planning (SNP), and Core Interface (CIF) at various stages of the project life cycle.

He is also an APICS-certified CSCP (Certified Supply Chain Planner) consultant, with exposure in functional areas of demand planning, lean management, value stream mapping, and inventory management across manufacturing, healthcare, and textile sectors.

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