SCM Champ: A Supply Chain Management Blog

SCM Champ: A Supply Chain Management Blog
Supply Chain Management: Its Not About Technology, Its About Economy

Tuesday, October 15, 2013

Process Flow Within SAP SCM APO System

So here is the process flow within the APO system and how APO works:

The fundamental problem of Supply Chain Planning is that the delivery time of products to customers is supposed to be substantially shorter than production time or lead time. In order to be able to realize a short delivery time, a pre-planning procedure is carried out that predicts future customer requirements as planned independent requirements. By using pre-planning, procurement is planned well in advance and stocks or safety stocks are produced on component or finished-product level in plants or distribution centers (DC) that, with good planning, enable a short delivery time to be realized.

You use what are called postponement strategies to define the extent to which the sales order penetrates the supply chain - in other words, the point at which there is a departure from anonymous make-to-stock production (push strategies) and make-to-order production (pull strategies) commences.

Generally speaking, supply chain planning is divided into several steps, some of which are executed by components in SAP ECC and others by components in SAP SCM. It is possible and advisable to integrate these two systems and use both together when planning.

Demand planning forecasts future customer requirements using past sales figures. This can be carried out in SAP ECC as part of flexible planning (using the special instance of the so-called standard SOP-Sales and Operations Planning) or in SAP SCM in Demand Planning. Demand planning is then used to deduce planned independent requirements.

Demand management in SAP ECC can be used for administration (creating, changing and deleting) of planned independent requirements and for consuming planned independent requirements with sales orders. In SAP SCM you cannot maintain planned independent requirements manually. Planned independent requirements in SAP SCM are created from SAP ECC or from Demand Planning and are consumed in a similar way to requirements strategies in SAP ECC. You can also derive SAP ECC planned independent requirements from SAP SCM DP.

Sales orders are only created in the SAP ECC system. The ATP check of a sales order can take place globally in SAP SCM (integration with PP/DS is also possible).

Cross-plant planning is possible using Supply Network Planning in SAP SCM. Material requirements planning and capacity requirements planning can be executed in either SAP ECC or SAP SCM.

Production execution, in other words, the processing of manufacturing orders (production orders or process orders) takes place in the area of Supply Chain Manufacturing.

Demand Planning (DP) allows you to forecast customer requirements by making forecasts on the basis of historical consumption data, for example. Demand planning data is usually period-based and unconstrained. Forecast data is then released as planned independent requirements for SNP and PP/DS.

You use the production horizon to decide which requirements are to be planned in SNP and which are to be planned in PP/DS. The longer the production lead times, the longer the production horizon that must be set on the SNP2 tab page of the product master. Requirements that are not covered by PP/DS within the production horizon are covered by SNP outside the production horizon.

Supply Network Planning is a period-based, medium-term, cross-plant planning process that plans production outside the SNP production horizon and plans procurement outside the stock transfer horizon.

Production Planning and Detailed Scheduling is used for short-term, order-based planning according to sequences and setup times within the PP/DS horizon. The planning run does not create any new orders within the planning time fence. In this way, production is not disrupted. Procurement is planned outside of the planned delivery time in PP/DS.

Deployment and Transport Load Builder (TLB) are part of the SNP module and are used for short-term replenishment planning to adjust stock transfers according to short-term changes on both the demand and the receipt side. No new stock transfers are created by the planning processes within the stock-transfer horizon.


The SAP SCM system is a planning tool that cannot be used in isolation. During planning, SAP SCM relies on data from SAP ECC (stocks or sales orders, for example), while dates and quantities planned in SAP SCM are executed in SAP ECC. The planning process in SAP SCM is therefore linked to a constant exchange of data between SAP SCM and SAP ECC.

Planned independent requirements in SAP SCM can result from Demand Planning in SAP SCM itself (release the forecast to SAP SCM Demand Planning), for example. However, these planned independent requirements can also be transferred to SAP ECC for further planning.

Sales orders and planned independent requirements form the starting point for Supply Network Planning (SNP) and Production Planning / Detailed Scheduling (PP/DS) in SAP SCM. Existing storage location stock is also included in planning. Sales orders are entered in the SAP ECC system and transferred from there to SAP SCM.

In Supply Network Planning (SNP) you plan the short or medium term horizon for the entire supply chain: You generate stock transport requisitions (for planning and stock transfer) between distribution centers and plants and can also use SAP SCM SNP to generate planned orders (for in-house production planning) and purchase requisitions (for external procurement planning) directly in the production plant for the longer term horizon. In Production Planning and Detailed Scheduling, however, you usually generate planned orders and purchase requisitions directly in the production plant for the short-term horizon. Transaction data generated in SAP SCM is transferred using the SAP ECC SCM interface (CIF: Core Interface) to the SAP ECC system for execution.

The process of Supply Chain Planning can be divided into many steps, which are executed by various components in SAP ERP Central Component (SAP ECC) (previously SAP R/3) and/or SAP SCM. It is a good idea and it is practical to integrate these two systems and use both of them together when planning. The SCM Core Interface (CIF) is used for this system integration.

Demand Planning, where past sales figures can be used to derive a future program of production, can be executed both within Flexible Planning in SAP ECC using Standard Sales and Operations Planning, or within Demand Planning in SAP SCM.

Planned independent requirements can be created from SAP ECC Demand Management or SAP APO Demand Planning. You can also use Demand Planning mass processing to set the sales quantities from SCM Demand Planning as planned independent requirements in ECC Demand Management.

Sales orders are entered in the SAP ECC system. A global available-to-promise check (Global ATP) for a sales order can be made in SCM (integration with Production Planning/Demand Scheduling is also possible).

Supply Network Planning in SAP SCM is used for cross-plant planning. Material Requirements Planning can be executed in either ECC or SCM. Notice that in ECC, Capacity Requirements Planning must be executed in a second separate step, as opposed to Production Planning and Detailed Scheduling of SCM, where quantities and capacities can be planned simultaneously.

Planned independent requirements are stock requirements that can be derived from a forecast of the future requirement situation. In make-to-stock production, you want to initiate the procurement of the materials concerned, without having to wait for actual sales orders. This means that delivery times can be shortened. It also means that you can use forecast planning to distribute the load across the individual production resources as evenly as possible.

Planned independent requirements can be created in APO-DP and released to APO-PP/DS. Alternatively, they can be created in ECC and transferred to APO using the Core Interface (CIF).

Sales orders (customer independent requirements) are created by sales and distribution in ECC. Customer requirements may be transferred directly to material requirements planning, depending on the requirements type that has been defined. This is always required for customer-specific planning. For planning in APO PP/DS, the sales orders have to be transferred to APO using the CIF.

Sales orders can be used as exclusive requirements sources, for which procurement is then specifically triggered (make-to-order production), or, together with planned independent requirements, they can create the total requirement. Consumption with planned independent requirements is also possible.

Planned independent requirements can be created in various ways as a basis for planning in APO-PP/DS:

1. An APO Demand Planning (APO-DP) forecast can be transferred to Demand Management. This function is referred to as the release of planned independent requirements.

2. Planned independent requirements can be created in ECC and transferred to APO using the ECC-APO Core Interface (CIF). For this purpose, planned independent requirements must be included in an active integration model. The active planned independent requirements are then transferred to APO (inactive planned independent requirements are not transferred).

3. You can also create planned independent requirements in the product view in test systems by entering a quantity with a minus sign. Since these are saved in APO, but not in the APO database or in an InfoCube, it is not advisable to use this method to maintain operational planned independent requirements.

Planned independent requirements created in ECC are automatically transferred to APO using the ECC-APO Core interface (CIF) if an active integration model is available for the planned independent requirements of the relevant material.

Planned independent requirements created in APO (for example, using APO Demand Planning) are not transferred using the APO Core Interface. However, you can transfer the planned independent requirements from APO to ECC using mass processing in Demand Planning (the transfer profile in Demand Planning). This is necessary if Demand Planning is executed in APO but the other planning steps (production planning) are executed in ECC.

In Demand Planning, a forecast is executed on the basis of aggregated historical data. The historical data is derived from the data structures (InfoCubes) in SAP BW (Business Warehouse). The structure and formatting of the planning figures can be defined with extreme flexibility using characteristics (for example, product, location and sold-to-party) to classify the key figures (for example, invoiced quantity).

The release of planned independent requirements from APO-DP is based on a specific key figure, which is contained in the DP planning folder and can generally be defined by the user (for example, the sales quantity). To release this key figure as a planned independent requirement, you must also create a reference to product-location combinations because planned independent requirements always refer to these combinations. Therefore, the planning folders usually contain the Product and Location characteristics to allow you create these references directly.

The transfer of planning data from APO-DP to production planning in APO (SNP or PP/DS) is referred to as the release of planned independent requirements. You execute the release from the Demand Planning menu (the .Release to Supply Network Planning. transaction). This name may be confusing, since the released requirements are also relevant for PP/DS). You can also execute the release in the background in mass processing (Demand Planning in the background) using a release profile.

Planned independent requirements usually refer to product-location combinations. In planning with final assembly (requirements strategy 20), planning therefore contains all of the expected sales order quantities for all sold-to parties. A reservation of certain portions of the planning quantities for certain customers is not possible in this case.

Sales orders are entered in Sales in ECC (ECC-SD) and are then transferred to APO using the APO Core Interface The requirements type and the requirements class in ECC determines the behavior of the sales order: In APO, the behavior of a sales order in Demand Management (for example, whether consumption takes place) is similarly defined using the check mode. If a sales order is transferred to APO with a specific requirements class, its behavior in APO is therefore determined by the check mode with the same description.

The check modes must be known in APO. They can be transferred from ECC to APO using the APO Core Interface. When the ATP Customizing is transferred, the ECC requirements classes are mapped to the corresponding APO check modes. Transaction data is generally transferred to APO in the form of orders with a specific category. For example, sales orders have the BM category and planned independent requirements have the FA category. To transfer transaction data from ECC to APO, it must be included in a corresponding integration model.

As of SCM 4.0, the requested quantity and the desired availability date of a sale order affect availability, regardless of whether an ATP confirmation has taken place. The “Use requested quantity” setting in the SAP_PP_002 standard heuristic (Planning Standard Lots) is no longer required (in this case, the sales orders behave in the same way as in ECC materials planning).

If the confirmed quantity and delivery date are to be used in planning as the result of an ATP check, the .Fixed date and qty. indicator must be set in the sales order.

Up to APO 3.1, only the ATP-confirmed quantities of a sales order affect availability. For example, if a sales order cannot be confirmed, it does not play a role in planning, since the confirmed quantity is zero. However, you can make a setting in the product view to determine that these orders are at least displayed.

The requested quantity can also be read. You can use a relevant heuristic to plan the requirement quantities in APO 3.1. For example, you can use the “Use requested quantity” setting in the SAP_PP_002 standard heuristic (Planning of Standard Lots). If the confirmed quantity and delivery date are to be used in planning as the result of an ATP check, the “Fixed date and qty” indicator must be set in the sales order.

(Reference: SAP SCM Demand Planning and SAP SCP Production Planning and Detailed Scheduling)