Contents

3
1 MY FIRST PLAN....................................................................................................... 5
1.1 FORECASTING BUILDING BLOCKS............................................................6
1.1.1FC BUILDING BLOCK 1PREPARATION ANDBASICSETUP.........8
1.1.1.1 Step 1: Create Info Objects.....................................................................8
1.1.1.2 Step 2: Create Info Object Catalog.........................................................9
1.1.1.3 Step 3: Create InfoCube..........................................................................9
1.1.1.4 Step 4: Load InfoCube..........................................................................10
1.1.1.5 Step 5: Create Storage Buckets Profile.................................................12
1.1.1.6 Step 6: Create Master Planning Object Structure.................................13
1.1.1.7
Step 7: Create DP Planning Area........................................................................14
1.1.1.8
Step 8: Create Characteristic Value Combinations.............................................16
1.1.1.9
Step 9: Create Planning Buckets Profiles............................................................16
1.1.1.10
Step 10: DP Planning Book Design..................................................................17
1.1.1.11
Step 11: Create Forecast Profiles......................................................................19
1.1.2
FC
B

UILDING
B
LOCK
2

B
ASIC
U
SAGE
.................................................................20
1.1.2.1
Step 1: DP Interactive Planning 1 (Univariate Constant and Trend)...............20
1.1.2.2
Step 2: Create and Assign Selection IDs...........................................................20
1.1.2.3
Step 3: Forecast Errors........................................................................................21
1.1.2.4
Step 4: Outlier and Workday Correction.............................................................21
1.1.2.5
Step 5: DP Interactive Planning 2 (Adv. Univariate Constant and Trend) ......22
1.1.2.6
Step 6: DP Interactive Planning 3 (Univariate Seasonal and Seasonal Trend) 22
1.1.2.7
Step 7: Proportional Factors Management..........................................................23
1.1.3
FC
B

UILDING
B
LOCK
3

P
ROMOTION
P
LANNING
.................................................24
1.1.3.1
Step 1: Define Promotion Settings......................................................................24
1.1.3.2
Step 2: Create Promotion....................................................................................24
1.1.3.3
Step 3: Promotion Valuation...............................................................................25
1.1.3.4
Step 4: DP Interactive Planning 4 (Promotion Planning) ...................................26
1.1.4
FC
B
UILDING
B
LOCK
4

L
IFE
C
YCLE
M

ANAGEMENT
...........................................27
1.1.4.1
Step 1: Define Like Profile .................................................................................27
1.1.4.2
Step 2: Define Phase-In Profile...........................................................................27
1.1.4.3
Step 3: DP Interactive Planning 5 (Lifecycle Management)...............................28
1.1.5
FC
B
UILDING
B
LOCK
5

A
DVANCED
U
SAGE
........................................................29
1.1.5.1
Step 1: Distribution Functions ............................................................................29
1.1.5.2
Step 2: DP Interactive Planning 6 (Header, Distribution, DP Notes) .................29
1.1.5.3
Step 3: Create MLR and Composite Profiles......................................................30
1.1.5.4

Step 4: DP Interactive Planning 7 (MLR and Composite Forecast) ...................31

1.1.5.5
Step 5: Release to SNP........................................................................................32
1.2
S
UPPLY AND
D
EMAND
P
LANNING
B
UILDING
B
LOCKS
..........................................33
1.2.1
SDP
B
UILDING
B
LOCK
1

P
REPARATION AND
B
ASIC
S
ETUP
................................35
1.2.1.1
Step 1: Create SNP Planning Area......................................................................35
1.2.1.2

Step 2: SNP Planning Book Design....................................................................35

Contents
4
1.2.1.3
Step 3: Create Time Stream................................................................................ 37
1.2.1.4
Step 4: Create Supply Chain Model................................................................... 37
1.2.1.5
Step 5: Create Planning Version......................................................................... 38
1.2.1.6
Step 6: Initialize Planning Version..................................................................... 38
1.2.2
SDP
B
UILDING
B
LOCK
2

D
ISTRIBUTION
R
EQUIREMENTS
P
LANNING
................ 39
1.2.2.1
Step 1: Location Master ..................................................................................... 39

1.2.2.2
Step 2: Create Product Master (Finished Goods)............................................... 39
1.2.2.3
Step 3: Assign Data to Work Area and Supply Chain Model............................ 40
1.2.2.4
Step 4: Create Transportation Lanes .................................................................. 41
1.2.2.5
Step 5: Create Quota Arrangement..................................................................... 42
1.2.2.6
Step 6: Create Demand....................................................................................... 43
1.2.2.7
Step 7: Run Heuristics........................................................................................ 44
1.2.3
SDP
B
UILDING
B
LOCK
3

R
OUGH
-C
UT
P
RODUCTION
P
LANNING
....................... 46

1.2.3.1
Step 1: Create Product Master (Components).................................................... 46
1.2.3.2
Step 2: Create Resource ..................................................................................... 47
1.2.3.3
Step 3: Create Production Process Model (PPM)............................................... 47
1.2.3.4
Step 4: Assign Data to Supply Chain Model...................................................... 49
1.2.3.5
Step 5: Run Heuristics........................................................................................ 50
1.2.3.6
Step 6: Capacity Leveling .................................................................................. 50
1.2.3.7
Step 7: Release Forecast to DP........................................................................... 51
1.2.4
SDP
B
UILDING
B
LOCK
4

SNP
O
PTIMIZATION
.................................................... 53

1.2.4.1
Step 1: Update Master Data (Cost Fields).......................................................... 53
1.2.4.2
Step 2: Run SNP Optimization........................................................................... 54
1.2.4.3
Step 3: Release Forecast to DP........................................................................... 55
1.2.5
SDP
B
UILDING
B
LOCK
5

D
EPLOYMENT AND
TLB............................................. 56
1.2.5.1
Step 1: Deployment............................................................................................ 56
1.2.5.2
Step 2: TLB........................................................................................................ 56
1.2.6
SDP
B
UILDING
B
LOCK
6


M
AKE
I
T
E
ASY
............................................................ 58
1.2.6.1
Step 1: Basic Safety Stock.................................................................................. 58
1.2.6.2
Step 2: Extended Safety Stock ........................................................................... 59
1.2.6.3
Step 3: Create SNP Demand Profile................................................................... 60
1.2.6.4
Step 4: Create SNP Supply Profile..................................................................... 61

My First Plan
5
1
My First Plan
The first steps are the most difficult ones. This applies to many things in life and using APO is
notone of the easiest tasks either. This section of the Knowledge Bank is dedicated to those who
wantto get going on the system. Learning about APO without actively working on the system is
liketrying to learn driving a car through reading a book. There are several ways to really learn to
drivea car, and the route taken depends on personal preferences. The same applies to APO.This
section is subdivided into three streams, each containing several blocks aimed at supporting
anefficient learning process.

The User StreamIn this stream, which should be used by any novice to the system, some basic
activities areshown in a step-by-step easy to follow manner. The aim is to get a first impression
on howprocesses are carried out in the system. During this process a complete own
environment isset up providing an ideal platform for further investigation and knowledge
enhancement. Allexercises introduced in this stream should be working on the standard SAP
delivered APOsystem.I would like to encourage any beginner using this model as a base and then
to further developit. This is much easier than expected, as the main difficulty is to get started
and that is wherethe APO Knowledge Bank helps.

The Developer StreamIn this stream, which should be looked at by users with considerable
experience, someinteresting exercises are carried out. They are very handy for anybody who is
part of animplementation team, as they not only teach how to do a certain task but also serve as
areminder and help in consequent repetitions. These tasks should only be carried out by
moreexperienced users, either those who worked through the User Stream exercises, or from
thosewith previous experience.

The Specialty StreamThere is also a special section dealing with some common module
independent processes.Setup and usage of safety stock or VMI planning are two examples.
Exercises in this streamcan be carried out after the User Stream and independent of
the Developer Stream.The User Stream is subdivided into several building blocks. The blocks
follow each other in alogical sequence and it is advised to go through them in the described
sequence. The learningblocks are lined up to a large degree with the APO modules. The
Developer Stream is more alignedwith system requirements, as is to a large degree the Specialty
Stream

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Copyright Notes
All rights reserved. With the exception of quoting brief passages for the purpose of review, no
partof this publication may be reproduced or distributed in any form or by any means without the
prior written permission from the author. This includes the storage in any form of database or
retrievalsystem.It is recognized that certain words and abbreviations used in this document are the
property of therespective trademark holder. They are used for clarification and information
purposes only. Thisdocument is not an official publication of any company mentioned in it.
SAP,
R/2, R/3

,AcceleratedSAP, and ABAP/4

are registered trademarks of SAP Aktiengesellschaft,Neurottstrasse 16. 69190 Walldorf,

Germany. The document The APO Knowledge Book Supplyand Demand Planning is an
independent publication. Neither SAP, nor any other companymentioned in this publication is
responsible for the contents of this document under any aspect of press law.The information in

this document is correct and complete to the best of the authors knowledge. Itis based on APO
release 3.0 and patch level 20 as well as the published information of APO release3.1. All
recommendations made in this document are made without any guarantee whatsoever. Theauthor
also disclaims any liability in connection with the use of this document, the used data, andthe
recommendations contained in there.The views expressed in this document are solely those of
the author.
Contents
3
1
MY FIRST PLAN....................................................................................................... 5
1.1
F
ORECASTING
B
UILDING
B
LOCKS
............................................................................6
1.1.1
FC
B
UILDING
B
LOCK
1

P
REPARATION AND
B
ASIC
S
ETUP
....................................8
1.1.1.1

Step 1: Create Info Objects...................................................................................8

1.1.1.2
Step 2: Create Info Object Catalog .......................................................................9
1.1.1.3
Step 3: Create InfoCube........................................................................................9
1.1.1.4
Step 4: Load InfoCube........................................................................................10
1.1.1.5
Step 5: Create Storage Buckets Profile...............................................................12
1.1.1.6
Step 6: Create Master Planning Object Structure................................................13
1.1.1.7
Step 7: Create DP Planning Area........................................................................14
1.1.1.8
Step 8: Create Characteristic Value Combinations.............................................16
1.1.1.9
Step 9: Create Planning Buckets Profiles............................................................16
1.1.1.10
Step 10: DP Planning Book Design..................................................................17
1.1.1.11
Step 11: Create Forecast Profiles......................................................................19
1.1.2
FC

B
UILDING
B
LOCK
2

B
ASIC
U
SAGE
.................................................................20
1.1.2.1
Step 1: DP Interactive Planning 1 (Univariate Constant and Trend)...............20
1.1.2.2
Step 2: Create and Assign Selection IDs...........................................................20
1.1.2.3
Step 3: Forecast Errors........................................................................................21
1.1.2.4
Step 4: Outlier and Workday Correction.............................................................21
1.1.2.5
Step 5: DP Interactive Planning 2 (Adv. Univariate Constant and Trend) ......22
1.1.2.6
Step 6: DP Interactive Planning 3 (Univariate Seasonal and Seasonal Trend) 22
1.1.2.7
Step 7: Proportional Factors Management..........................................................23
1.1.3
FC

B
UILDING
B
LOCK
3

P
ROMOTION
P
LANNING
.................................................24
1.1.3.1
Step 1: Define Promotion Settings......................................................................24
1.1.3.2
Step 2: Create Promotion....................................................................................24
1.1.3.3
Step 3: Promotion Valuation...............................................................................25
1.1.3.4
Step 4: DP Interactive Planning 4 (Promotion Planning) ...................................26
1.1.4
FC
B
UILDING
B
LOCK
4

L
IFE
C
YCLE

M
ANAGEMENT
...........................................27
1.1.4.1
Step 1: Define Like Profile .................................................................................27
1.1.4.2
Step 2: Define Phase-In Profile...........................................................................27
1.1.4.3
Step 3: DP Interactive Planning 5 (Lifecycle Management)...............................28
1.1.5
FC
B
UILDING
B
LOCK
5

A
DVANCED
U
SAGE
........................................................29
1.1.5.1
Step 1: Distribution Functions ............................................................................29
1.1.5.2
Step 2: DP Interactive Planning 6 (Header, Distribution, DP Notes) .................29
1.1.5.3
Step 3: Create MLR and Composite Profiles......................................................30

1.1.5.4
Step 4: DP Interactive Planning 7 (MLR and Composite Forecast) ...................31
1.1.5.5
Step 5: Release to SNP........................................................................................32
1.2
S
UPPLY AND
D
EMAND
P
LANNING
B
UILDING
B
LOCKS
..........................................33
1.2.1
SDP
B
UILDING
B
LOCK
1

P
REPARATION AND
B
ASIC
S
ETUP
................................35
1.2.1.1
Step 1: Create SNP Planning Area......................................................................35

1.2.1.2
Step 2: SNP Planning Book Design....................................................................35

Contents
4
1.2.1.3
Step 3: Create Time Stream................................................................................ 37
1.2.1.4
Step 4: Create Supply Chain Model................................................................... 37
1.2.1.5
Step 5: Create Planning Version......................................................................... 38
1.2.1.6
Step 6: Initialize Planning Version..................................................................... 38
1.2.2
SDP
B
UILDING
B
LOCK
2

D
ISTRIBUTION
R
EQUIREMENTS
P
LANNING
................ 39
1.2.2.1

Step 1: Location Master ..................................................................................... 39

1.2.2.2
Step 2: Create Product Master (Finished Goods)............................................... 39
1.2.2.3
Step 3: Assign Data to Work Area and Supply Chain Model............................ 40
1.2.2.4
Step 4: Create Transportation Lanes .................................................................. 41
1.2.2.5
Step 5: Create Quota Arrangement..................................................................... 42
1.2.2.6
Step 6: Create Demand....................................................................................... 43
1.2.2.7
Step 7: Run Heuristics........................................................................................ 44
1.2.3
SDP
B
UILDING
B
LOCK
3

R
OUGH
-C
UT
P
RODUCTION
P

LANNING
....................... 46
1.2.3.1
Step 1: Create Product Master (Components).................................................... 46
1.2.3.2
Step 2: Create Resource ..................................................................................... 47
1.2.3.3
Step 3: Create Production Process Model (PPM)............................................... 47
1.2.3.4
Step 4: Assign Data to Supply Chain Model...................................................... 49
1.2.3.5
Step 5: Run Heuristics........................................................................................ 50
1.2.3.6
Step 6: Capacity Leveling .................................................................................. 50
1.2.3.7
Step 7: Release Forecast to DP........................................................................... 51
1.2.4
SDP
B
UILDING
B
LOCK
4

SNP
O

PTIMIZATION
.................................................... 53
1.2.4.1
Step 1: Update Master Data (Cost Fields).......................................................... 53
1.2.4.2
Step 2: Run SNP Optimization........................................................................... 54
1.2.4.3
Step 3: Release Forecast to DP........................................................................... 55
1.2.5
SDP
B
UILDING
B
LOCK
5

D
EPLOYMENT AND
TLB............................................. 56
1.2.5.1
Step 1: Deployment............................................................................................ 56
1.2.5.2
Step 2: TLB........................................................................................................ 56
1.2.6
SDP
B
UILDING
B

LOCK
6

M
AKE
I
T
E
ASY
............................................................ 58
1.2.6.1
Step 1: Basic Safety Stock.................................................................................. 58
1.2.6.2
Step 2: Extended Safety Stock ........................................................................... 59
1.2.6.3
Step 3: Create SNP Demand Profile................................................................... 60
1.2.6.4
Step 4: Create SNP Supply Profile..................................................................... 61

My First Plan
5
1
My First Plan
The first steps are the most difficult ones. This applies to many things in life and using APO is
notone of the easiest tasks either. This section of the Knowledge Bank is dedicated to those who
wantto get going on the system. Learning about APO without actively working on the system is
liketrying to learn driving a car through reading a book. There are several ways to really learn to
drivea car, and the route taken depends on personal preferences. The same applies to APO.This
section is subdivided into three streams, each containing several blocks aimed at supporting
anefficient learning process.

The User StreamIn this stream, which should be used by any novice to the system, some basic
activities areshown in a step-by-step easy to follow manner. The aim is to get a first impression
on howprocesses are carried out in the system. During this process a complete own
environment isset up providing an ideal platform for further investigation and knowledge
enhancement. Allexercises introduced in this stream should be working on the standard SAP
delivered APOsystem.I would like to encourage any beginner using this model as a base and then
to further developit. This is much easier than expected, as the main difficulty is to get started
and that is wherethe APO Knowledge Bank helps.

The Developer StreamIn this stream, which should be looked at by users with considerable
experience, someinteresting exercises are carried out. They are very handy for anybody who is
part of animplementation team, as they not only teach how to do a certain task but also serve as
areminder and help in consequent repetitions. These tasks should only be carried out by
moreexperienced users, either those who worked through the User Stream exercises, or from
thosewith previous experience.

The Specialty StreamThere is also a special section dealing with some common module
independent processes.Setup and usage of safety stock or VMI planning are two examples.
Exercises in this streamcan be carried out after the User Stream and independent of
the Developer Stream.The User Stream is subdivided into several building blocks. The blocks
follow each other in alogical sequence and it is advised to go through them in the described
sequence. The learningblocks are lined up to a large degree with the APO modules. The
Developer Stream is more alignedwith system requirements, as is to a large degree the Specialty
Stream.

My First Plan
6
1.1
Forecasting Building Blocks
It is required to set up the Demand Planning environment before any forecasting activities can
becarried out. Unlike SNP, where one can start straight away using the delivered system, we
need togo through quite a lot of steps beforehand. These prep rational steps are not required in a
liveenvironment but going through them provides a very good chance to understand the system
muchbetter.

Preparation and Basic SetupSet up a DP environment with all required entities such as planning
area, planning book, andforecast profiles.

Basic UsageIn this block univariate forecasts are carried out and several parameters of the
forecast profileswill be investigated. It also provides an introduction to the maintenance of
proportional factors.

Promotion PlanningPlanning promotions is vital in most industries and part of this block.

Life Cycle ManagementFinally some products will be planned using Life Cycle Management
functionality.

Advanced UsageThe main emphasis is the usage of multiple linear regression as well as the
integration withother APO modules.
The Forecast Exercise Environment
The DP planning area and the corresponding InfoCube have 6 characteristics (Product,
ProductGroup, Location, Country, Customer, and Customer Group). A total of 10 key figures are
defined,of which 4 are stored in the InfoCube. For these InfoCube based key figures, sample data
isprovided in a spreadsheet, which can be loaded into APO. Please note that the spreadsheet
needs tobe saved as a comma delimited file before it can be used for uploading. The spreadsheet
containsdata for various products, locations and planning versions. The table below lists the first
section of the spreadsheet with the data for Tdd equal to T00. The consequent sections
contain the samedata with dd changing running from 00 through to 25.
Product ProductGroupLocation Country Customer CustomerGroup
T00PR01 T00PG01 T00DC01 AU T00CU01 T00CG01T00PR01 T00PG01 T00DC02 AU T00C
U02 T00CG01T00PR01 T00PG01 T00DC03 AU T00CU05 T00CG01T00PR02 T00PG01 T00D
C02 AU T00CU02 T00CG01

My First Plan
7
Product ProductGroupLocation Country Customer CustomerGroup
T00PR01 T00PG01 T00DC01 AU T00CU01 T00CG01T00PR03 T00PG02 T00DC02 AU T00C
U02 T00CG01T00PR03 T00PG02 T00DC03 AU T00CU02 T00CG01T00PR05 T00PG02 T00D
C01 AU T00CU01 T00CG01
Table 1 DP Product Data Overview
The info objects are grouped in catalogues. The planning granularity is weeks and months.
Theplanning area supports standard (i.e. no characteristics dependent) planning. Data is
displayed inthe planning book using a telescoping planning buckets profile for historical and
future data. Theplanning book, which is created for the exercises is basic, but supports all normal
planningactivities.The master forecast profile supports all types of forecasts. It uses a 36-months
history (01/1999through to 12/2001) and 24-months forecast (01/2002 through to 12/2003)
horizon. Both aredefined with fixed dates that are aligned with the provided test data.The
forecast created in the Forecasting exercises can be used as an input to the Supply
andDemand Planning exercises. All master data is aligned.