SAP APO - General Overview

Business Consulting
SAP APO Overview and

Business Opportunities
2001 Andersen. All rights reserved
Andersen European SAP Centre of Excellence
Agenda
SCM today. Why APO?
APO functions
APO Integration
APO Market
2001 Andersen. All rights reserved 2
The Supply Chain :From Supplier to Consumer
INFORMATION FLOW
Transfer
Supplier
Transfer
Manufacturer
Transfer
Distribution
Transfer
Retail Outlet
CASH FLOW
Supply Chain Optimization
Increase customer responsiveness at least cost
SAP AG 2001
Consumer
Reasons for the Supply Chain Management I

To reduce the inventory level and the operating capital.
To improve the use of resources and the efficiency of the operations.
To lower the cost of origin of finished products and raw materials.
To obtain a global vision of the resources, the plans, etc.

To optimize the decision making in sorroundings of more and more complex
business.
Reasons for the Supply Chain Management II

Integration with e-marketplaces, allowing a global compare of the vendors in
a easy and fast way.
To level the supply and demand through a planning integration tool.
Improve the use of assets and reduce the waste actions.
To reduce the cycles of planning and manufacture.
NEW CONCEPT??????
Todays Supply Chain Pain. Secuencial Supply Chain
SAP AG
Todays Business Reality
SAP AG
Coordination Through Event Management
SAP AG
SAPs Total Supply Chain Solution
Todays Supply Chains are not online

... to CNO
Tier 3
Supplier
Tier 2
Supplier
Tier 1
Supplier
Today
2002
Manual communication
(phone/fax/EDI)
Unsynchronized planning cycles
78%
65%
FAX, e-mail
60%
EDI
60%
Assumption-based planning
28%
Excessive inventory buffers
SAP AG
Online
88%
(Internet/Extranet)
Forrester Research, 2000
Why SAP and SCM?

APO as a Planning Advance tool. More than MRP II
The initial strategy of SAP was to certify interfases of external vendors in Advance
planning.
This interfases are still in use.
The market requires for a functionality of advance planning and scheduling:
optimizor
simulation
restriction based
High performance in real time
SAP Supply Chain Management
APO integration
Planning and Optimization

APO
Analysis
BW
Execution
Vendor
P
Procurement
S
Production
Contracts
Contracts
Internet
Intranet
R/3
ERP
SAP AG
Customer
Distribution
Internet
APO features I
Simultaneous material and capacity planning across multiple levels of the logistics
chain
Seamless technical integration between APO, BW and R/3

Direct performance measurement
Reduction of planning time, what-if scenarios
Consideration of existing bottlenecks
Optimization of plans in harmony with operative aims
Synchronization of different activities in the logistics chain
Integration between customers and suppliers (e.g. collaboration)
Transparency across the complete logistics chain
Increased accuracy in planning
APO features II
Maximize ability to react to customer
Flexibility
Ability to supply
Minimize the costs of the complete supply chain

Procurement
Production
Transportation
Warehouse management
Optimize use of assets

Raw materials, semi-finished products, finished products, resources for
production, transportation, and storage
Agenda
SCM today. Why APO?
APO functions
Introduction.Business Scenarios
Demand Planning
Supply Network Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
APO: Planning Sequence.

Demand Planning
Supply Network
Planning
Forecast
Planned Orders
Recommended
Transport Orders
Production Planning
Detailed Scheduling
Deployment
Transport Load
Builder
Confirmed
Transport Orders
Transport
Orders
R
SAP AG
APO Areas
Measure
Supply Chain Performance Management
Strategize
Source
Make
Direct
Procurement
Manufacturing
Demand and
Supply Planning
Deliver
Order
Fulfillment
Partner
Customer
Collaborate
Supply Chain Design
Supply Chain Collaboration
Collaborate
Supply Chain
Network
Supplier
Plan
Supply Chain
Network
Partner
Track
Supply Chain Event Management

SAP AG
Network Design
Supply Chain Dessign
Design and redesign of your Supply Chain
SAP AG
Assignment of mySAP Applications to Supply Chain

Planning Levels
Planning
Strategy planning
Decisions about direction of the company
Supply Chain Design

Network Design (ND)
(plan infrastructure)
Operational aggregated planning (tactical planning)

Aggregated sales and demand
planning Demand Planning
(DP)
(SNP)
Operational detailed planning
Customer
Tactical planning: strategy realization and infrastructure planning
Ext. proc. planning

PP/DS
SNP
External procurement
for example,
LES, MM
SAP AG
Production
planning
PP/DS
SNP
Production
for example, PP
Outbound delivery
for example, LES,
MM, SD
Execution
Delivery planning
Deploy,
TP/VS, ATP
External
procurement at
customer
Partner
(operational planning)
Functional Arquitecture.
R/3
R/3
APO
APO
SAP -BW
SAPBW
Supply Chain Cockpit

Historical
Historical
Demand Planning
Data
Data
Sales
Orders
Key
Key
Production
Perform.
Perform.
Planning and
Manufacturing
Execution
Global
Detailed
Scheduling
ATP
Deployment
Transport
SAP AG
Network
Planning
Inventory
Management
Supply
Indicators
Indicators
External
External
Data
Data
(e.g.
(e.g. POS)
POS)
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
Strategize
Supplier
Collaborate
Supply Chain
Network
Supply Chain Design
Source
Make
Direct
Procurement
Manufacturing
Demand and
Supply Planning
Deliver
Order
Fulfillment
Partner
Customer
Collaborate
Measure
What are my expected sales?

What is the impact of causal factors?
What is the impact or promotions and competitor
activity? Management
Supply Chain Performance
What is the impact of new products?
Does my current forecast support the budget plan for
my key account?
Plan
Demand Planning
Supply Chain
Network
Partner
Track
SAP AG
Demand Planning functionality

Planning type:
Manual / Automatic
Historic
Collaboration
Promotion planning
Canibalization
Lifecycle planning
Forecasting Accuracy
Planning levels:
Product
Product Group
Dimensions: Sales area,
client,.
Planning material
Planning Book
SAP AG
Promotion Planning
SAP AG
Tools (1)
Tool to share information and collaborate between 2 or more partners (external and
internal).
Information about demand and forecasting.
Supplying information
Data selection throught selection IDs.
Optional update list.
Display and manage alerts.
Grouped by type.
Filtered by priority
Macros execution. (Possible to link macros and alerts).
Sending mails trought email
Tools (2)
Advances Macros technics:
Logic functions: if, else if, ...
Operators and mathematical functions: (), <>, sin, sqrt, ...

Causal analysis : market campaigns
Forecasting models:
Alisado exponencial, Holt-Winters,...
Authomatic selection of models.
Seasonal linear regression
Forecasting combination:
Pick-the-best.
Promotion planning
Analysis and comparing results.
Releasing the plan to SNP.
Basic Planning enhancements

High Performance thru Live Cache Architecture
Fixed Values at Aggregated Level
Navigation Attributes for Data Selection
Characteristics Dependent Planning
Distribution Function with distribution patterns
Statistical Methods
Seasonal linear regression (planificacin con variables dependientes)
Manual forecasting
Graphical capabilities
Life cycle
Like modelling
Pase-in/out (ie product introduction)
Collaborative Demand Planning I
SAP AG
Collaborative Demand Planning II
SAP AG
Benefits
Demand visibility
Improve forecasting accuracy
Improve customer service
Reduce inventory levels
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market

Measure
Partner
SAP AG
Supply Chain Design
Demand and
Supply Planning
Deliver
Source
When and whereMake
should material be sourced,
produced, moved and stored?
Order
HowDirect
to satisfy demandManufacturing
at minimal cost?
Procurement
Fulfillment
Can all demand be satisfied while respecting all
constraints?
What is my profit- or cost-optimal product mix
given supply constraints?
What are the
consequences
of raising
my
Supply
Chain Event
Management
service level?
Customer
Collaborate
Collaborate
Supply Chain
Network
Supplier
Plan
Strategize
Supply Chain
Network
Partner
Track
Graphical Output of results
SAP AG
Basic Functionality
Automatic creation of feasible plans

using heuristics models.
Optimization based in costs/ profits
Control capacity at the vendor site.
Distribution calcul rule based.
Deployment
APO-SNP: Strategies
Production Model
SNP Heuristics:
Distribution by quotes
Manufacturer Plant
Taking into account delivery times

Check of production capacity
Manufacurer
DC
Customer DC
Supplier Plant
Automatic capacity leveling.

Supplier WH
SNP Optimization: Cost - Based

Selection of most suitable production plant.
Optimization of costs for production, transportation and storage
Mixed Integer Linear Programming / meta heuristics
Feasible plans
SNP Capable to match

Assignnment of requirements to quotations by means of priorities
Capable-to-Match
APO-SNP: Capable-to-Match
Categorized
receipts
Capable-to-Match
Prioritized
requirements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Cross-plant capacity check and check of

transportation possibilities
SAP AG
11.
Supply Network Planning- Capacity Leveling
SAP AG
SNP Sourcing
Make or Buy decission
Time depending sourcing

Lot Size depending sourcing
Quotation only necessary for multi sourcing
Interactive Sourcing like in Purchasing Workbench

Purchasing Contracts and Info Records
considered for External Procurement
Scheduling Agreements can be used for SNP
Costs
Costs
Transportation costs
Production costs
Inventory costs
Handling costs
Procurement costs
Location costs / subsidies
Fixed costs of maintenance
Costs of opening / closing down of locations
Public subsidies
Penalty costs (e.g. unfulfilled demand)

Deployment
Model with restriccions: capacities, calendars
Montreal
Distribution logic PULL
Calgary
Winnipeg
Montreal
Distribution logic PUSH

SAPCO
Customer
Philadelphia
Chicago
Fair Share Logic

New Orleans
One Step Deployment

Deployment Run without Heuristic
Considers most actual information
Allows multiple Deployment Runs per day
Integrated with Allocation module

Demand Prioritization possible
Cost optimization
Philadelphia
Benefits
Satisfy supply with demand dynamically
To model the distribution network and the existent restrictions.
Balance and optimize the distribution network
Reduce the inventory levels
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
Production Planning and Detailed Scheduling

Measure
Source
Make
Direct
Procurement
Manufacturing
Demand and
Supply Planning
Deliver
Order
Fulfillment
Partner
Customer
Collaborate
Supply Chain
Network
Collaborate
What is the optimal production plan in relation to

customer service and total costs?
Which material, Strategize
resources and capacity is needed Plan
and when?
Supplier
What is the optimal production
to
Supplysequence
Chain Design
minimize set-up, cost, work-in-process, delays ...?
Supply Chain
Network
Partner
Track

SAP AG
Production Planning & Detailed Scheduling in APO:

Advantages
PP / DS Features
Simultaneous material and capacity requirements planning for in-house production, external
procurement, and stock transfers in a production plant at operation level: Fast generation of
feasible plans
Immediate and automatic planning (for example, to trigger production from the plant) - close
integration with plant
Planning with exact times, even for dependent requirements (for example, a prerequisite for
material staging by shift)
Dynamic exception messages in real-time and based on order linking (pegging) across the whole
supply chain
Multi-level capacity requirements planning possible: automatic, multi-level, bi-directional

propagation of order changes
Planning of alternative resources
Available capacity: time, volumn, length ...
Consideration of restrictions in planning (for example, supplier capacity)
Schedule optimization (order sequencing, lead time, etc.)
Simulation and What If
Example.
Available
Occupied
1st loading attempt
Sales Order
Desired date
Final loading
and quantity
Confirmed date
and quantity
Capacity 1
Capacity 2
Capacity 3
t
Today
SAP AG
When APO PP/DS ?

Planning critical products (for example, products with long
replenishment times or products that are produced at bottleneck
resources)
Planning in a short-term time horizon with scheduling to the
second while taking order sequences into account
Generating a feasible production plan which includes the

following improvements:
Reduced lead times and an increase of deliveries that are on time,
leading to greater customer satisfaction
Increased throughput of products based on a better coordination of

resources
Reduced stock costs since the work-in-process stocks are limited due to
better coordination of product release
Production Planning & Detailed Scheduling in APO:

Integration
R/3 (1)
When APOwith
PP/DS
? II
PP/DS is a planning tool. Execution functions such as
confirmations and goods receipts are performed in R/3.
R/3 supplies APO with data relevant for planning (such as
master data, sales orders).
Planning results are transferred from APO back to R/3. If
required, planning is completed in R/3 (for example, if all of the
products of a BOM structure are not planned in APO).
If you plan a component in R/3, you must also plan all related
subcomponents in R/3
Recommendation:
Wrong
Right
Key
Planned in APO
Planned in R/3
Benefits
Improve the material flow

Reduce stocking levels
Less non-planned hours
Improve resource utilization
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
Order Fulfillment
Measure
Make
Direct
Procurement
Manufacturing
Demand and
Supply Planning
Deliver
Order
Fulfillment
Partner
Customer
Collaborate
Source
Plan
Supply Chain
Network
Collaborate
Can we fulfill this customer order from stock

or planned orders?
Can we fulfill this customer order by new
production order and
when do we have
Strategize
material and capacity available?
Supplier
Can this order be fulfilled through substitute
Supply Chain Design
products or alternative locations?
Supply Chain
Network
Partner
Track

SAP AG
Global Availability Check
Global ATP. Basic Functionality
Availability check
product availability
product substitution
location substitution
Product allocation
check against planning
check against production
check of production versions
capacity check
component availability
SAP AG
Global ATP. R3 and APO I
SAP AG
Global ATP. R3 and APO II

Sales order
R/3
APO
Confirmation
Sales (SD)
ATP request
Save sales order
Sales order
Planned order
MRP
Planned order
ATP check
For non-availability
Production Planning/
Detailed Scheduling
Update time series
SAP AG
Produce
Benefits
Improve the service level
High performance even with great volum of data.
Greater visibility of the requirements
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
Transport Planning
Measure
Supplier
Collaborate
Supply Chain
Network
Supply Chain Design
Source
Make
Direct
Procurement
Manufacturing
Demand and
Supply Planning
Deliver
Order
Fulfillment
Partner
Customer
Collaborate
Strategize
Which transport orders can be combined?

Which mode of transport should be used?
Which delivery route should be taken?
Plan transportation costs?
What are the minimal
Supply Chain
Network
Partner
Track
SAP AG
Transportation planning using SAP-APO
Transport Planning
Transportation planning
medium-term and bucket planning
compressed view of requirements for one period (e.g. week, month, year)
Vehicle scheduling
short-term and order planning (usually next couple of days)
planning for actual and virtual orders
link to the SAP Logistics Execution System (LES) to support the planned
business processes
SAP AG
Transportation planning using SAP-APO
Transport Planning (in the next release APO 3.1 1stQ-2002)

Transportation planning / Vehicle scheduling
Real and fictitious vehicle planning. First planning based in fictitious
resources and later on substitution by real resources when confirmed
transports.
VSO: Vehicle Space Optimizer. Load optimization
Route planning at street level.
SAP AG
Transport Planning
Service line descriptor - OPTIONAL - in case there isnt any, cancel grey line
Space Reserved
for
Fotograph or icon
(OPTIONAL)
Alerts
Logo del
Cliente (opcional)
Andersen 2001. Todos los derechos reservados
Alerts
Measure
Strategize
Source
Direct
Procurement
Demand and
Supply Planning
Customer
Collaborate
Supply Chain Design
Collaborate
Supply Chain
Network
Supplier
Plan
Supply Chain
How can I stay in control in view of an increasing need for
Network
business velocity?
Make
How can I effectivelyDeliver
coordinate processes both internally
and throughout the extended supply chain?
How
can I automate responseOrder
to unplanned events?
Manufacturing
Fulfillment
Partner
Partner
Track

Supply Chain Cockpit.

Tool to modelize and monitor the Supply Chain
Planung
PlanungStammdaten
Material
Material
Auftrag
Auftrag
Stammdaten
System
Hilfe
Liste
APO
SAP AG
Supply Chain Cockpit.

Cockpit
Alert Monitor
Planung
Planung
Stammdaten
Material
Auftrag
Material Stammdaten
Auftrag
Hilfe
Engineer
System
Liste
Alerts
Modelizing
Several views to monitor
SAP AG
APO
APO
Supply Chain Cockpit / Alert Monitor

Engineer
Basic Functionality
Supply Chain Modelizor
Global visibility
Cockpit
Managing exceptions.
APO integration with R3 and BW.
Supply Network Design.
Alert Monitor
KPIs.
Queries.
SAP AG
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
APO - R3 integrationIn Technology

CIF
APO
R/3 Plugin
CRM
BW
R/3
BBP
SEM
Integration
SAP AG
Upgrades - Future development
The components and technology of

my.SAP SCM
APO Arquitecture
Demand Planning
Collaborative
Planning
Production
Planning
Transportation
Planning
Global
ATP
Solver
liveCache
InfoCube
ERP
BW
SAP AG
R/3
R/2
Optimization
Cartridge
Marketplace
Agenda
SCM today. Why APO?
APO functions
Demand Planning
PP/DS
Global ATP
Transport Planning
APO Integration
APO Market
SAP Competitors Provide Parts of the Puzzle
Networking
Planning
Execution
Coordination
SAP AG
APO - European Andersen Projects
Metal Products
Data mart (BW)set up

integration with R/3
forecast models
collaborative planning
extensive use of planningbooks and macro's
BW reporting
Colombo Filippetti
Metal Products. camshaft mechanism
- material planning and resource detailed scheduling
- supplier scheduling
- Available To Promise
Consumer Goods. Industrial Baker
DP in live
Currently, rest of APO modules in progress
implementation
APO Examples: Non Andersen Projects

Colgate
Supplier Performance Measurement,
Vendor analysis
Novo Nordisk A/S

Centralized management of
production, shipment and
stock information;
valued stock, on-time delivery,
lead time for purchasing,
average stock
Owens Corning
Inventory levels, DOS, production
confirmation levels,
shipment levels
SAP AG
Hewlett Packard
Supply Chain KPIs:
Inventory,
Orders,
Delivery,
Profitability,
Customer information
Roche Diagnostics
Stock analysis,
Batch controlling,
Backorder analysis,
Forecast accuracy by plant, product
Non Andersen implementation
Industry and financial analysts

SAPs Advanced Planner & Optimizer version 3.0 (APO
3.0) is ready to compete head on with even niche vendors
products, meeting most of the needs of any company
looking to add supply chain planning to its technology
roster.
AMR, Robert Ferrari
SAP has made significant headway with its mySAP.com
solution. In particular, based on our discussions with
prospective customers, we believe the supply chain product
is now very competitive.
GOLDMANN SACHS, N.N.
END
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Business Consulting

SAP APO Overview and

2001 Andersen. All rights reserved

Andersen European SAP Centre of Excellence

2001 Andersen. All rights reserved 2

The Supply Chain :From Supplier to Consumer

Supply Chain Optimization

Increase customer responsiveness at least cost

Reasons for the Supply Chain Management I

To obtain a global vision of the resources, the plans, etc.

2001 Andersen. All rights reserved 4

Reasons for the Supply Chain Management II

2001 Andersen. All rights reserved 5

Todays Supply Chain Pain. Secuencial Supply Chain

2001 Andersen. All rights reserved 6

Todays Business Reality

2001 Andersen. All rights reserved 7

Coordination Through Event Management

2001 Andersen. All rights reserved 8

SAPs Total Supply Chain Solution

2001 Andersen. All rights reserved 9

Todays Supply Chains are not online

2001 Andersen. All rights reserved 10

Why SAP and SCM?

High performance in real time

2001 Andersen. All rights reserved 11

SAP Supply Chain Management

Planning and Optimization

2001 Andersen. All rights reserved 12

Seamless technical integration between APO, BW and R/3

Consideration of existing bottlenecks

Optimization of plans in harmony with operative aims

Synchronization of different activities in the logistics chain

Integration between customers and suppliers (e.g. collaboration)

Transparency across the complete logistics chain

Increased accuracy in planning

2001 Andersen. All rights reserved 13

Minimize the costs of the complete supply chain

Optimize use of assets

2001 Andersen. All rights reserved 14

APO: Planning Sequence.

2001 Andersen. All rights reserved 16

Supply Chain Performance Management

Supply Chain Design

Supply Chain Collaboration

Supply Chain Collaboration

Supply Chain Event Management

2001 Andersen. All rights reserved 17

Supply Chain Dessign

Design and redesign of your Supply Chain

2001 Andersen. All rights reserved 18

Assignment of mySAP Applications to Supply Chain

Supply Chain Design

Operational aggregated planning (tactical planning)

Operational detailed planning

Tactical planning: strategy realization and infrastructure planning

Ext. proc. planning

2001 Andersen. All rights reserved 19

Supply Chain Cockpit

2001 Andersen. All rights reserved 20

Supply Chain Design

What are my expected sales?

2001 Andersen. All rights reserved 22

Supply Chain Event Management