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Planning Units
April 19th, 2016
1. Introduction
The Supply Chain master data model used by the SCM Planning Operator in S&OP
describes the entire supply chain of a company, at least the entire part of the supply
chain to be considered within S&OP. By the superordinate term SCM Planning
Operator we refer to SCM planning algorithms in S&OP, i.e. SCM heuristic and the
optimizer which are used to compute a supply plan.
Based on organizational or regional responsibilities, in general planners often do not
plan the entire model but rather just a sub-network they are responsible for or want to
manage in a particular step. These sub-networks are denoted in the following as
Planning Units (PUs). Meanwhile, it was decided to rename the term Planning Units
into Sub-Networks as of IBP 4.0. However, this rename is not yet applied to this
documentation.
Such a PU is built, like the entire network, from nodes (which are location products or
customer products) and arcs (which connect these nodes to model transport links
between them). An attribute in the location product master data defines to which PU
a location product belongs. So, PUs can be structured by product groups or regions
or any other property of locations, products, or location products.
There is a set of location products that a user is allowed to display data for. This is
defined via S&OP Visibility Filters (see the S&OP documentation on users and roles).
All node-related and all arc-related key figures of these location products are
available as input to the SCM Planning Operator in the planning session. Also all
customer products related to the selection are used in the planning session.
A planner can select one or several PUs before starting a new planning session.
These selected PUs, briefly called the selection or the selected PUs, implicitly
define the set of location products which are changeable for an SCM Operator call.
One can configure which Planning Units a user is allowed to change and hence
which ones are available for planning with the SCM Operator. This has to be a
subset of the Visibility Filter.
When calling the SCM Planning Operator the system computes a supply plan for the
selected PUs. This means the supply plan computations take as input Consensus
Demands if they are to be satisfied by (at least) one of the selected PUs and the
computations take as input the results (Dependent Location Demands and
Transports) of the planning runs of neighboring not selected PUs, which are
Page 1
downstream (being supplied by the PUs to be planned). The SCM Operator stops at
the boundaries of the selected PUs to prevent that the supply plans of the
neighboring PUs are overwritten.
Supply plans can be computed individually for PUs (or selections of them) in an
arbitrary order. Therefore, the system needs to support all possible situations in
which a supply plan does or does not exist for all or some neighboring PUs. This
document will explain the boundary logic in more detail in a sub-sequent section.
2. Assumptions
We assume that for Planning Units the following assumptions hold:
a) An attribute Planning Unit on location product level defines the PU of a location
product. This implies that each location product belongs to at most one PU. If the
attribute Planning Unit has an initial value the corresponding location product does
not belong to any PU.
b) Customer Products and with this Customer Demands do not belong to Planning
Units.
c) Customer Demands can in general be supplied from several locations belonging to
different PUs. Heuristic and optimizer then will propagate only a portion of the
Customer Demand to the selected PUs which is computed with the quotas of the
customer sourcing master data. For example if a Customer Demand of 10 units has
to be sourced from a location product in PU A with 30% and from another location
product in PU B with 70% the SCM Operator would compute a fraction of the total
Consensus Demand of 3 units if the user selects only PU A for a planning session.
d) Before starting a planning session, the user can specify one or several Planning
Units to be selected for this planning session. It is not possible to only select parts of
PUs. However, given sufficient permissions a user can select no Planning Unit, in
which case the whole network is selected. The system then will load the entire model
into this planning session and the SCM Operator will compute a plan for the entire
network, if called. The SCM Planning Operator will change key figures only within the
boundaries of the selected PUs, i.e. only those key figures which belong to location
products within these PUs and key figures belonging to arcs of which at least one of
the two connected location products belong to one of the selected PUs. However,
there is an exception to this rule which is explained around figure 9b in section 3.2.
Which PU a user is allowed to select for planning and whether or not the user can
plan the entire network is configured via a new type of permission.
f) If the user wants to change the selection of location products to be planned, he has
to terminate (save and/or cancel) the current and start a new planning session, with
changed PU selection criteria.
Page 2
g) Each output and each input product (better to say each output and each input
location product) of a production source should belong to a Planning Unit. Each
output and each input product can belong to another Planning Unit. However, the
model is less complex if all output and all input products, i.e. the entire production
source of supply belongs to only one Planning Unit.
If you assign different PUs to output and input products, i.e. if not the entire
production source is modelled within one single PU, additional cost key figures have
to be populated before you run the S&OP Optimizer to compute a supply plan for the
some of the affected PUs. (See chapter 6).
h) Resources are not assigned explicitly to PUs.
i) It is not allowed to model a resource which is used by location products of different
PUs. If resource R is used by location products (via P-rules) of PU A and by location
products of PU B, the capacity demand of R would be incomplete if a user selects
only PU A or B. Hence, the optimizer would compute a supply plan without taking into
account the entire capacity demand of R. We might therefore add checks to prevent
resources being used by different PUs.
3. Boundary Logic
3.1 The Concept of the Boundary Logic
As explained in section 1 Planning Units are introduced to enable planners to plan
sub-networks, i.e. merely the part of the entire supply chain they are responsible for
or interested in. To do so, planners can select just one PU or they can combine
several PUs into one selection.
For example, several global planners, each responsible for a product group, might
plan for selections of PUs where the individual PUs represent all the regional part of
a product groups supply chain. The complete selection represents the global plan.
After this step two planning processes have to be performed in order to achieve a
common global plan for the entire company. First, the global supply plans of the
product groups have to be combined into one common global supply plan containing
all products. Second, the regional planners might have to adapt the global product
group plans to their regional needs and limitations. In the sequel we describe in detail
how these two processes can be managed by S&OP on HANA.
A transportation sourcing rule (T-rule) crosses the border between two PUs, if the
ship-to location product belongs to PU A and the ship-from location product to PU B.
We differentiate between inner and outer border arcs. Inner border arcs cross the
border between two selected PUs. Outer border arcs cross the border between a
selected and a not selected PU.
Page 3
If a planner has selected several PUs, it is assumed that he is responsible for the
whole selection and therefore allowed to generate a new plan or to change the
existing one for this entire selection. His responsibility ends at the Outer Border Arcs
meaning that the system should prevent him from making changes to neighboring
location products outside his selection. A result of his planning process is a supply
plan for his selection and certain proposals (concerning demand and supply) at the
outer border arcs. Planners of neighboring PUs or neighboring sub-networks should
be able to see the outer border proposals, but both parties have to negotiate to find
an agreement called Outer (Border) Handshake about how much demand is
propagated up-stream and how much supply is provided down-stream along the
supply chain.
A (global) planner who is responsible for a selection of PUs might want to fix certain
decisions at the inner border arcs to make these decisions binding restrictions for his
subordinate regional planners. We call this the Inner (Border) Handshake. While an
Outer Handshake is a result of a negotiation between planners on the same level, the
Inner Handshake is an alignment of high-level global plans with subordinate local
plans.
3.2 Examples
Figure 1 depicts a (simplified) representation of a selection of two Planning Units A
and B. For simplicity both PUs are made up of only one location product. Starting
point for this example is one customer demand of 20 units.
The planner has selected both PUs so that PU A and B are part of the planning.
Figure 1 illustrates the result of the SCM Planning Operator. We assume in this and
in all subsequent examples and figures that the planning horizon is only one period
and stock on-hand is zero. In addition, it is assumed no lead time between the two
locations.
In all sub-sequent figures you will see the selected PUs in front of a blue background,
in Figure 1 these are both PUs A and B. Key figures in blue color belong to the
selection, i.e. they might be updated by the SCM Planning Operator. Key figures in
green color belong to PU B, if B is not selected (and therefore will not be updated by
the SCM Planning Operator). Key figures in red color belong to PU A, if A is not
selected (and therefore will not be updated by the SCM Planning Operator).
Page 4
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
D:
S:
R:
N:
DCD: 20
CR: 20
D:
N:
R:
S:
Dependent Demand
Supply
Total Receipts
Net Demand
20
20
20
20
BB
OLD: 20
D:
N:
R:
S:
TR: 20
DCD:
OLD:
CR:
TR:
20
20
20
20
OLD: 20
TR: 20
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Once the planner is satisfied with his plan he can fix demand and supply at the
inner border arcs. To perform this Inner (Border) Handshake he just has to set an
Adjusted Transport as one can see in Figure 2. It should be clear that Figure 2
shows the result of a heuristic run after the user has entered the value 16 into the
Adjusted Transport (ATR). With the Adjusted Transport the planner has fixed supply
and as a consequence the corresponding Outbound Location Demand at that arc.
Note: Adjusted Transports key figure here has the very same behavior as in
situations without PUs or within a PU.
Page 5
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
BB
OLD: 16
20
20
16
20
TR: 16
D:
N:
R:
S:
16
16
16
16
OLD: 16
TR: 16
ATR: 16
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
In a next step a planner selects only PU A (see Figure 3). Then the heuristic Infinite
with No Shortages will compute for this selection the supply plan shown by Figure 3.
Based on a Consensus Demand of 20 the resulting Net Demand is 20. As the
Adjusted Transport is set to 16 (either by a global planner as shown in Figure 2 or by
PU B), the heuristic propagates an Outbound Location Demand of 16 in upstream
direction. As PU B is not part of the selection, this demand propagation stops at the
outer border arc. The selected PU A computes its supply plan based on the given
Transport Receipts of 16 which happens to be fixed by the Adjusted Transport from
the previous planning step performed globally or by the planner of PU B.
In Figure 3 we see two new key figures:
- IPUDLD: Inter-Planning Unit Dependent Location Demand
- IPUTR: Inter-Planning Unit Transport Receipts
Both IPU-key figures are used to decouple two neighboring PUs and therefore they
have a specific semantic at outer border arcs. They are ignored at inner border arcs.
We will explain their functionality in detail starting with Figure 6.
Page 6
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
16
20
OLD: 16
IPUDLD:
TR: 16
D:
N:
R:
S:
16
16
16
16
OLD: 16
TR: 16
ATR: 16
IPUTR:
PU A respects supply
fixed by global
planner or PU B
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
The difference of the following example in Figure 4 compared to the one in Figure 3
is that ATR is not set or was blanked out by the planner. If ATR (and key figure
IPUTR) is initial the SCM Planning Operator then takes the value in key figure
Transport (TR) as the given supply for PU A. This value (which is 16 in Figure 4)
defines the supply for PU A. PU A cannot assume to get more and it cannot take less
even in a case in which it would need less than the given supply of 16 units. For
that reason the TR value as the ATR is modelled as a pseudo-hard constraint for
the optimizer.
Page 7
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
16
20
OLD: 20
IPUDLD:
TR: 16
D:
N:
R:
S:
16
16
16
16
OLD: 16
TR: 16
ATR:
IPUTR:
PU A respects supply
computed by the
global planner or PU B
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
In contrast to the previous example (Figure 4) the next example (Figure 5) shows a
situation in which none of the supply key figures TR, ATR, or IPUTR stores a value.
This constellation exists if PU B was not yet planned at all for that period or if the
planner of PU B has deleted his plan. As a consequence, no supply is defined for PU
A which results in a Receipts quantity of zero as depicted by Figure 5.
Page 8
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
0
20
OLD: 20
IPUDLD:
TR:
D:
N:
R:
S:
OLD:
TR:
ATR:
IPUTR:
PU A has no supply
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
No supply
determined by PU B
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Setting a value into key figure IPUTR is part of the Outer Border Handshake in
which both planners have agreed on how much goods will be delivered from PU B to
PU A. The planner of PU A will set the agreed amount into IPUTR to fix this supply
Page 9
for his PU. And, as we will see below, the planner of PU B has to fix this supply too
via key figure ATR in order to manifest the Outer Border Handshake on his side.
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
20
20
OLD: 20
IPUDLD:
TR:
D:
N:
R:
S:
OLD:
TR:
ATR:
IPUTR: 20
Planner A decouples
PU A from PU B
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
The only difference between the examples of Figures 6 and 7 is that in Figure 7 the
incoming Customer Demand is 13 instead of 20 units. As IPUTR still is set to 20 and
as PU A has to take the entire supply PU A is able to satisfy the Customer Demand
and it builds up a Projected Inventory (not displayed) of 7 units at the end of the
depicted planning period. As mentioned above, the supply key figures TR, ATR and
IPUTR define absolute fixed values meaning that PU A has to receive exactly the
quantity defined in one of these key figures independent of the actual Net Demand of
PU A and independent of what PU B really is able to deliver.
As shown in Figure 7 the IPUTR impacts the Outbound Location Demand as it
overrules (not overwrites) the Net Demand.
Page 10
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 13
CR: 13
D:
N:
R:
S:
13
13
20
13
OLD: 20
IPUDLD:
TR:
D:
N:
R:
S:
OLD:
TR:
ATR:
IPUTR: 20
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Figure 8 below continues the example of Figure 6, but with the change that now PU
B was selected to be planned independently. The Outbound Location Demand (OLD)
computed during the planning process of PU A now is input for PU B. Based on this
Dependent Demand PU B computed (as shown in Figure 8) a Supply of 20 units.
Key figure Inter-Planning Unit Dependent Location Demand (IPUDLD) is a key
figure in which a user can enter values to over-rule the OLD values. If key figure
IPUDLD contains a non-initial value (zero or any other integer value) the SCM
Planning Operator takes this non-initial value from IPUDLD as input for PU B to
compute its Dependent Demand as we will explain in the sequel.
This logic of IPUDLD versus OLD decouples PU B from PU A because the input for
PU B is not always and immediately changed after PU A has generated a new plan, it
stays constant until someone (presumably the planner of PU B) changes or blanks
out the IPUDLD value(s).
Page 11
Planning of PU B
Selection = {B}
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
OLD: 20
20
20
20
20
IPUDLD:
TR: 20
D:
N:
R:
S:
20
20
20
20
OLD: 20
TR: 20
ATR:
IPUTR: 20
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
In Figure 9 we now assume that the planner of PU B has used the optimizer to
compute a supply plan for his planning unit (whereas the plan shown in Figure 8
possibly was computed with the heuristic or the optimizer.) What we see in Figure 9
is that supply now is lower (16 units) than the Dependent Demand (20 units) clearly
indicating that the optimizer could not find enough supply to satisfy the entire demand
of 20 units given by PU A. As a result the transport from PU B into PU A contains 16
units only. As IPUTR is still 20, there is no impact on PU A. A value in key figure
IPUTR protects the downstream Planning Unit A from being updated while PU B is
planned.
Page 12
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
20
20
OLD: 20
D:
N:
R:
S:
IPUDLD:
TR: 16
16
16
16
16
OLD: 16
TR: 16
ATR:
IPUTR: 20
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
If there was no IPUTR set (as shown in Figure 9b) the transport quantity computed
by planner B would be immediately updated into PU A as shown by Figure 9b.
The system updates key figures Total Receipts, Projected Inventory and Deficit at the
receiving location product (DC1 in PU A). All other key figures of DC1 which depend
on Total Receipts will be updated when Planning Unit A is planned again.
In general, only key figures belonging to the selected Planning Units are updated by
the S&OP operator (heuristic or optimizer). As an exception to this rule, only the key
figures Total Receipts, Projected Inventory and Deficit are updated outside the
selection, if key figure IPUTR is initial.
Page 13
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
20
20
16
20
OLD: 20
IPUDLD:
TR: 16
D:
N:
R:
S:
16
16
16
16
OLD: 16
TR: 16
ATR:
IPUTR:
Immediate update of
Total Receipts, Proj.
Inventory and Deficit
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
If the planner of PU B decided to fix his supply he would have to populate key figure
Adjusted Transport (ATR) as shown in Figure 10 which shows the result after the
planner has entered / copied the value 16 into key figure ATR and after he has called
the SCM Planning Operator. It is noticeable that the ATR value in Figure 10 overrules the OLD (and if IPUDLD is non-initial, the IPUDLD value as well) when PU B
computes its Dependent Demand. For that reason the Dependent Demand (D) at
DC2 is 16 (derived from ATR) and not 20 units.
As mentioned above, setting a value into ATR is the task resulting out of the Outer
Border Handshake which the planner of PU B has to perform. According to this
agreement he should fix his supply (and by doing so implicitly the incoming demand)
in order to guarantee the agreed supply to PU B.
As in Figure 10 key figure IPUTR contains a value PU A is protected and hence not
updated after the planner of PU B has updated key figure ATR. If IPUTR was initial,
the update of key figure ATR would lead to an update of key figures Total Receipts,
Projected Inventory and Deficit of location product DC1 / P1 in PU A.
Page 14
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 20
CR: 20
D:
N:
R:
S:
OLD: 20
20
20
20
20
D:
N:
R:
S:
IPUDLD:
TR: 16
16
16
16
16
OLD: 16
TR: 16
ATR: 16
IPUTR: 20
Planner B fixes
his supply
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
With Figure 11 we continue the example of Figure 10. The user has selected PU A
again and he has increased the Customer Demand from 20 to 21. In addition, the
assumption here is that the planner wants to generate a supply plan for this
increased Customer Demand independently of the supply which was fixed by himself
(in key figure IPUTR) or his colleague, the planner of PU B who has set key figure
ATR. To be able to ignore the fixed supply the SCM Planning Operator will offer a
new parameter (Compute Expected Supply). If this parameter is chosen the system
will ignore (but not delete) the values in key figures TR, ATR and IPUTR and it will
compute the supply which is needed to satisfy the demand of PU A (which is 21 units
in Figure 11) and it will update these computed supplies into key figure IPUTR. This
functionality is illustrated in Figure 11 as the fixed supply values are stroked through
and it is visible that IPUTR gets updated by the expected supplies.
Page 15
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
21
21
21
21
OLD: 21
D:
N:
R:
S:
IPUDLD:
TR: 16
16
16
16
16
OLD: 16
TR: 16
ATR: 16
IPUTR: 20
IPUTR: 21
PU A computes
expected supply
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
PU A updates
IPUTR
DCD:
OLD:
CR:
TR:
Operator parameter:
Compute_Exp_Supply = YES
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Page 16
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
21
21
21
21
OLD: 21
IPUDLD: 18
TR: 18
D:
N:
R:
S:
18
18
18
18
OLD: 18
TR: 18
ATR:
IPUTR: 21
Planner B blanked
out ATR
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Figure 12: Blanking out ATR values and entering a value into IPUDLD
We assume that meanwhile the planners of PU A and B had their Outer Border
Handshake agreement according to which 20 units should be supplied from PU B to
A. Figure 13 illustrates what happens if the planner of PU B enters this agreement
into the system, i.e. into key figure ATR. The supply plan which is computed after the
planner of PU B has called the SCM Planning Operator is given by Figure 13.
Again, the ATR over-rules the demand key figures, i.e. OLD and IPUDLD which
becomes visible by the Dependent Demand of DC2, which is 20 (and not 18 or 21).
The planner of PU B can optionally set the IPUDLD value to 20 as well (which is not
assumed for Figure 13.) The situation might look more logical if IPUDLD was set to
the same value as the fixed supply (ATR). However, the planner could also decide to
leave IPUDLD unchanged, for instance, to remember himself what the original
demand was (before the ATR was set according to the Outer Border Handshake.
Page 17
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
21
21
21
21
OLD: 21
D:
N:
R:
S:
IPUDLD: 18
TR: 20
20
20
20
20
OLD: 20
TR: 20
ATR: 20
IPUTR: 21
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
As mentioned above already, both planners have to implement the agreement of the
Outer Border Handshake and this means that the planner of PU A also has to fix the
agreed quantities. This part of the process is visualized by Figure 14 which shows
the result of the SCM Planning Operator after planner B has entered the agreed
supply of 20 units into IPUTR. As the Customer Demand is still 21 units and as PU A
gets only 20, PU A cannot satisfy the entire demand.
Page 18
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
21
21
20
21
OLD: 20
IPUDLD: 18
TR: 20
D:
N:
R:
S:
20
20
20
20
OLD: 20
TR: 20
ATR: 20
IPUTR: 20
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
To make our example even more interesting Figure 15 continues with a scenario in
which a (global) planner again selected both Planning Units. The SCM Planning
Operator, when called, blanks out and ignores all IPUDLD and IPUTR values at inner
border arcs, i.e. at arcs which cross two selected PUs.
The SCM Planning Operator then re-plans the entire selected model without the
demands and supplies previously fixed via the two IPU key figures. However, as ATR
is not blanked out the supply between both PUs is still fixed in the example of Figure
15. Figure 16 then shows what happens after a user has removed the ATR value.
Now the heuristic is able to plan the entire model without any limitations concerning
supply between the two PUs.
Page 19
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
BB
OLD: 20
21
21
20
21
D:
N:
R:
S:
IPUDLD:
TR: 20
20
20
20
20
OLD: 20
TR: 20
ATR: 20
IPUTR:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
Planning Unit B
Planning Unit A
DC2 / P1
DC1 / P1
A
C1
DCD: 21
CR: 21
D:
N:
R:
S:
21
21
21
21
BB
OLD: 21
D:
N:
R:
S:
IPUDLD:
TR: 21
21
21
21
21
OLD: 21
TR: 21
ATR:
IPUTR:
Global planner
removed ATR
D:
S:
R:
N:
Dependent Demand
Supply
Total Receipts
Net Demand
DCD:
OLD:
CR:
TR:
ATR:
Adjusted Transport
IPUDLD: Inter-Planning Unit Loc. Demand
IPUTR: Inter-Planning Unit Transport
The boundary logic is mainly controlled by these two IPU Key Figures and Adjusted
Transports (ATR) which users have to manage. To support the users in this task one
can configure special copy-functions to copy values from TR into ATR and from OLD
into IPUDLD or from ATR into IPUTR.
It is also important to be able to remove (to blank out) values in these key figures. For
instance, a planner might want to remove the IPU values (and, of course, the
Adjusted Transport values) while simulating a scenario without the boundary
conditions that are the result of a Handshake as described above. Another process
requesting the ability to blank out these values is the beginning of a new planning
cycle, after rolling forward the supply plan by one month to the future. To support
such processes S&OP on HANA will offer dedicated calls of the SCM Planning
Operator to selectively blank out the ATR, IPUTR and IPUDLD key figures in
upstream and downstream direction.
It also might be useful to have functions to blank out selectively the IPU values at
inner border arcs.
Page 21
Page 22
DLD (P,DC2,DC1)
OLD (P,DC1,DC2)
22 23 24
21 22 23 24
DC1
B
Lead time = 1
DC2
Tr. Supply 11 12 13
(P,DC2,DC1)
Figure 17: IPU Non-Delivery Costs at the border between Planning Units
Page 23
IPU Non-Delivery
Cost Rate (P, NULL,DC1)
31 32 33 34
41 42 43 44
DLD (P,DC2,DC1)
OLD (P,DC1,DC2)
A
DC1
22 23 24
21 22 23 24
B
Lead time = 1
DC2
Tr. Supply 11 12 13
(P,DC2,DC1)
The SCM Operator has no output key figure for IPU Receipts Costs, however, it is
possible for a user to configure this calculation as part of a calculated key figure
which then could be displayed on the S&OP user interface.
The overall procurement costs of a Planning Unit can be derived by aggregating the
IPU Receipts Costs and the normal Receipts Costs related to U-rules connected with
location products belonging to that PU.
IPU Non-Delivery Costs and IPU Receipts Costs are taken into account, only when a
user decided to restrict the planning session and hence the SCM Planning Operator
to one or several PUs instead of the entire network and if the corresponding location
products are at the border of the selected PUs.
(product, location, ship-from location). This means this key figure is based on delivery
times at the ship-to location. To be related to the delivery date means that the
transportation costs are computed for the period in which transports arrive at their
destination.
The technical name of the output key figure Transport Receipts Ship-To is
TRANSPORTSHIPTO and the key is: product, location, ship-to location.
IPU Non-Delivery
Cost Rate (P,NULL,DC1)
31 32 33 34
41 42 43 44
DLD (P,DC2,DC1)
OLD (P,DC1,DC2)
22 23 24
21 22 23 24
DC1
B
Lead time = 1
DC2
Tr. Supply 11 12 13
(P,DC2,DC1)
0 11 12 13 (P,DC2,DC1)
(P,DC2,DC1)
Transport Cost Rate
1
to are stored in the same periods as in Transport Receipts which are related to the
delivery time. Fixed transport costs are not considered in Figure 19, but one would
have to follow the same pattern as for the variable transportation costs.
While computing a supply plan for a Planning Unit or a selection of PUs the optimizer
takes into account the IPU Non-Delivery Costs, the IPU Receipts Costs and all other
costs, like the (normal) transportation costs (in downstream direction, i.e. for all
transports starting in the selected PUs), production costs etc.
Calculating Revenue
IPU Non-Delivery
Cost Rate (P,NULL,DC1)
41 42 43 44
DLD (P,DC2,DC1)
OLD (P,DC1,DC2)
22 23 24
21 22 23 24
DC1
B
Lead time = 1
DC2
Tr. Supply 11 12 13
(P,DC2,DC1)
As indicated by the dotted lines the revenue for this lane can be calculated by simply
multiplying the values in key figure Non-Delivery Cost Rate, period by period, by key
figure Transport Receipts Ship-to, which is:
Revenue (P,DC1) = 0 * 11 + 11 * 42 + 12 * 43 + 13 * 44
Page 27
50%
10%
OCD:
50 | 50 | 50 | 50 | 50
CR:
50 | 50 | 50 | 50 | 50
OCD:
10 | 10 | 10 | 10 | 10
CR:
10 | 10 | 10 | 10 | 10
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
DC1
DC2
20%
20%
DC3
DC4
50%
10%
OCD:
50 | 50 | 50 | 50 | 50
CR:
50 | 50 | 50 | 50 | 50
OCD:
10 | 10 | 10 | 10 | 10
CR:
10 | 10 | 10 | 10 | 10
DC1
DC2
20%
20%
OCD:
CR:
OCD:
CR:
DC3
DC4
Figure 22: Selection contains only Planning Unit A: Result of the Heuristic
50%
10%
OCD:
60 | 40 | 60 | 50 | 55
CR:
60 | 40 | 60 | 50 | 55
OCD:
CR:
0 | 20 |
0 | 20 |
0 | 10 |
0 | 10 |
DC1
0
0
DC2
20%
20%
OCD:
CR:
OCD:
CR:
DC3
DC4
As shown in Figure 23, in period 1 the optimizer decided to deliver the entire PU DD
of PU A from DC1 and nothing from DC2. In period 2, in contrast, it decided to deliver
only 40 units from DC1 and the remaining portion (20) from DC2 for any reason
which cannot be concluded out of this Figure. In period 5 the optimizer was not able
to satisfy the entire demand; it just could provide 55 units from DC1.
A user can also impact the lane-specific Dependent Customer Demands and the PU
DD via key figure Adjusted Customer Receipts (ACR) and Adjusted Customer
Supply (ACS). As ACR is the upstream key figure corresponding to the downstream
key figure ACS we again explain the functionality only for the upstream key figure
ACR.
The technical name of Adjusted Customer Receipts is
ADJUSTEDCONSTRAINEDDEMAND and the key contains these attributes:
Customer, Product, Location.
The technical name of Adjusted Customer Supply is
ADJUSTEDCONSTRAINEDDEMANDDS with the key: Customer, Product, Location.
Page 30
A user might use both key figures, the Adjusted Outbound Customer Demand and
the Adjusted Customer Receipts simultaneously. We therefore explain in the sequel
the effect of both key figures when used exclusively and in their combination. We first
look at the S&OP Heuristic and then at the S&OP Optimizer. To do so, we refer to
the example of Figure 21 as a starting point. We assume that a user entered values
for the Adjusted Outbound Customer Demand (AOCD) in periods 2 and 5 (as shown
by Figure 24) and values for Adjusted Customer Receipts (ACR) in periods 3, 4 and
5 at the lane to DC1.
50%
10%
AOCD:
OCD:
| 40 |
|
| 60
50 | 40 | 40 | 70 | 45
ACR:
CR:
|
| 40 | 70 | 45
50 | 40 | 40 | 70 | 45
OCD:
10 | 10 | 10 | 10 | 10
CR:
10 | 10 | 10 | 10 | 10
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
DC1
DC2
20%
20%
DC3
DC4
It is now assumed that a user selected both PUs (A and B) and that he runs the
S&OP Heuristic. Figure 24 shows the resulting supply plan.
In period 1 there is no difference compared to the initial plan given by Figure 21
which is not surprising as no entries for AOCD or ACR exist in period 1, i.e. there is
no change compared to Figure 21 at all.
In period 2 the AOCD of 40 units reduces (over-writes) the Dependent Customer
Demand of 50 units which were derived (in Figure 21) via the quota of 50%. As a
consequence the S&OP Heuristic computes a reduced Supply of 40 units; it does not
make sense to ship more than the demand requests. This means, the AOCD impacts
the OCD which is propagated along the lane / C-rule it is defined for. In this example
it lowers the OCD from 50 to 40 units. As the PU DD is the sum of the OCDs of all
Page 31
incoming lanes to that PU the AOCD also has an impact on the PU DD in the
example here it lowers the PU DD for PU A to 50 units (without AOCD it was 60).
This is the reason why in period 2 only 90 (and not 100) units are supplied to the
customer.
In period 3 there is an entry for ACR of 40 units. This fixes the Customer Receipts to
40 units. As a consequence to a fixed supply element the SCM Planning Operator
adjusts (fixes) the corresponding demand element which is the Outbound Customer
Demand at that lane in that period. The OCD value is therefore set to 40 as well.
In period 4 the user again has entered a value into key figure ACR. In contrast to
period 3, this value (70) is higher than the previously computed OCD - which was
derived via the quota multiplied by the Consensus Demand, i.e. 50% * 100 = 50. An
ACR higher than the previously computed OCD is especially interesting when the
optimizer is chosen (which we will see below).
In period 5, the user has entered values in both, the AOCD and the ACR. The 45
units in key figure ACR has the strongest impact, it fixes the Customer Receipts and
as a consequence the corresponding OCD. The AOCD of 60 has no effect on the
heuristic. However, this will be different for the S&OP Optimizer, as we will see in the
sequel.
It is important to realize that the Total Customer Receipts deviate from the
Consensus Demands (of 100 in each period) in periods 2 to 5 which is a
consequence of the defined AOCD and ACR values.
The key figures AOCD and ACR have a slightly different behavior when the S&OP
Optimizer is used instead the S&OP Heuristic. This is explained along Figures 25
and 26.
If the user runs the S&OP Optimizer for the example given by Figure 24 and he
selects PU A only the result might look like as in Figure 25. The result might look like
the plan shown in Figure 25 but it could also be different dependent on how costs
and constraints are set, which is not visible. In addition, it is assumed for Figure 25
that the key figures OCD and CR at lanes to DC3 and DC4 have not been changed
since the last run displayed by Figure 24 so that they still store the same values as in
Figure 24 - which is intended as PU B was not selected for this run. In other words,
values in key figures at the lanes to DC3 and DC4 are not deleted just because they
do not belong to the new selection of PUs.
In period 1 the PU DD is 60 units which are satisfied completely from DC1 (for
instance because this is the solution with the lowest costs in period 1).
For period 2 the user has entered an AOCD of 40 units which limits the OCD along
this lane. As a consequence the sourced Consensus Demand along the lane to DC1
is 40 only, whereas the sourced Consensus Demand to DC2 is still 100 * 10% = 10,
Page 32
50%
10%
AOCD:
OCD:
| 40 |
|
| 60
60 | 50 | 40 | 70 | 45
ACR:
CR:
|
| 40 | 70 | 45
60 | 50 | 40 | 70 | 45
OCD:
CR:
0 | 0 | 20 |
0 | 0 | 20 |
DC1
0 | 25
0 | 25
DC2
20%
20%
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
OCD:
20 | 20 | 20 | 20 | 20
CR:
20 | 20 | 20 | 20 | 20
DC3
DC4
user has not selected PU B there is no possibility for the optimizer to balance this
out, for instance by lowering supply coming from locations in PU B. For that reason
the Total Customer Receipts is 110 in period 4, and hence 10 units above the
Consensus Demand.
In period 5 we have an AOCD of 60 and an ACR of 45. The AOCD increases the PU
DD from 60 to 70 units: 60 units along the lane to DC1 (due to the AOCD) plus 100 *
10% = 10 units along the lane to DC2. This means, the optimizer should satisfy a
demand of 70 units in total from PU A. As the supply from DC1 is limited to 45 it
compensates this by increasing the supply from DC2 to 25 so that in total the
supply from PU A is 45 + 25 = 70 units. As a consequence of the increased PU DD
and as the supply from PU B is still 40 the overall receipts (Total Customer Receipts)
are 110 and hence are over-delivering the Consensus Demand of only 10 units. But,
this is exactly what should be possible via key figure AOCD: a user should be able to
impact the delivered quantities without the need to change Consensus Demands nor
quotas.
In the context of period 5 in Figure 25 it becomes obvious that the ACR has an
impact (if optimizer is chosen) only in cases where it (better to say the sum of all
ACR at all lanes) is greater than the PU DD. In such cases the PU DD is increased to
the sum of all ACR of all lanes. In this example the sum of all ACR is 45 and the PU
DD is 60 + 10 = 70 and hence, the ACR does not increase the quantity which is
delivered from PU A in total, it is still 45 + 25 = 70 which is the PU DD.
The next interesting case is shown by Figure 26 which is the same example as in
Figure 25 with the only difference that the user now selected both PUs (A and B)
and not just PU A.
Figure 26 shows one possible result of the optimizer meaning that depending on the
defined costs and constraints (such as available capacity supply) it could be different.
It is important to be aware that the PU DD is computed with respect to all selected
PUs. In Figure 25 the PU DD was computed only for PU A, in Figure 26 it is
computed for both PUs.
In period 1 the PU DD for PU A, denoted as PU DD(A) is 60 and the PU DD(B) for
PU B is 40 so that the optimizer is fed with an overall PU DD(A+B) of 100 units. (In
Figure 25 this was just 60 units as only PU A was selected). The optimizer decided to
deliver the entire quantity (100 units) from DC1.
For period 2 the user defined an AOCD of 40 units which impacts the PU DD(A): the
Dependent Customer Demand at this lane is limited to 40 (instead to 50 without the
AOCD) so that the overall PU DD(A+B) is computed by:
PU DD(A+B) = 40 + 100 * 10% + 100 * 20% + 100 * 20% = 90 units.
Page 34
50%
AOCD:
| 40 |
|
| 60
OCD: 100 | 90 | 40 | 70 | 45
ACR:
|
| 40 | 70 | 45
CR:
100 | 90 | 40 | 70 | 45
10%
OCD:
0 | 0 | 60 | 30 |
CR:
0 | 0 | 60 | 30 |
OCD:
0| 0|
0|
0 | 65
CR:
0| 0|
0|
0 | 65
OCD:
0| 0|
0|
0| 0
CR:
0| 0|
0|
0| 0
DC1
DC2
20%
20%
DC3
DC4
Figure 26: Possible result of the S&OP Optimizer with PU A+B selected
Here again, the optimizer decided to supply the entire demand from DC1. Obviously
it is cost-optimal to ship the entire quantity from DC1.
In period 3 there is an Adjusted Customer Receipts (ACR) of 40 units which fixes the
supply at this lane to 40. As there is no AOCD defined, the PU DD(A+B) is again 100.
The optimizer tries to fulfill the entire PU DD(A+B) and for that reason it had to ship
the remaining quantity (60 units) from another location than DC1.
In period 4 the user entered an ACR (70 units) which is higher than the dependent
demand (50 units) derived out of the quota for the lane to DC1. This ACR fixes the
supply to 70 at this lane. The optimizer usually does not over-deliver Consensus
Demands, if avoidable, and hence it compensates this higher Customer Receipts
from DC1 by a lower supply from DC2 of 30 units only.
Due to the AOCD of 60 units in period 5 the PU DD (A+B) is 110 which is
computed as for period 2 (see above), but now with these 60 units instead of the 40
units in period 2. This means, in total the optimizer tries to satisfy a demand of 110.
As the supply from DC1 is fixed to 45 units the optimizer decided to deliver the
remaining 65 units from somewhere else. In this solution the optimizer decided to
ship 65 units from DC3, for instance as DC2 could not provide the relevant capacity
or for any other reason.
Page 35
50%
C1
DC3
B
DC4
Planning Unit A
A
DC1
Planning Unit C
DC5
5%
T-rule
A
DC2
DC1/ A
X1
Figure 28 zooms into the model given by Figure 27. (To simplify the example the Pand U-rule connected with DC1 in PU A and the Consensus Demand are removed.)
Page 36
It is assumed that a user selected PU A only and performed the S&OP Heuristic for
this selection. It is further assumed that DC1 received a Dependent Demand (D) of
100 and 200 units in periods 1 and 2 from previous locations (in downstream
direction). The heuristic computed a Net Demand (N) of 100 and 200 units when PU
A was planned before. This Net Demand is propagated along all sourcing rules
according to their quotas so that the result shown by Figure 28 is generated.
50% of the Net Demand at DC1 is propagated along a T-rule to DC2 and the
heuristic then computes Net Demand and everything else for DC2. As a result the
Transport Receipts (TR) from DC2 to DC1 is computed as well. In contrast to this
inner arc the heuristic does not compute Transport Receipts at the Outer Border Arcs
(from DC3, DC4, and DC5) as this key figure at the Outer Border Arcs - is an input
for PU A and will be populated or changed only when PU B and C are planned. This
implies that if key figure TR stored values from a previous run then these values still
would be visible and taken as input for PU A, but not changed by a planning run of
PU A. In Figure 28 it is assumed that PU B and C have not yet been planned at all
because key figure TR does not store any value yet and hence TR remains empty
after the planning run for PU A. And as consequence, the supply at these lanes for
PU A is zero. As a consequence the Receipts at DC1 contain only the Transports
coming from DC2. As the heuristic (No Shortages) always supplies the entire
Dependent Demand the resulting Projected Stock (I) is negative (assuming Stock-on
hand is zero).
Planning Unit A
DC1
D: 100 | 200
I: -50 | -100
N: 100 | 200
R: 50 | 100
S: 100 | 200
DC3
B
DC4
50%
OLD: 50 | 100
TR:
50 | 100
DC2
D:
I:
N:
R:
S:
D: Dependent Demand
I: Projected Stock
50 |
0|
50 |
50 |
50 |
100 A
0
100
100
100
N: Net Demand
R: Tot. Receipts
Planning Unit C
C
DC5
S: Supply
Page 37
If parameter Compute Expected Supply (introduced with Figure 11) was set to
Yes the plan of Figure 28 would look like slightly differently: the S&OP Heuristic
would assume to receive the expected supply, i.e. the Receipts at DC1 would be
100 and 200 in periods 1 and 2 as this is needed to satisfy the demand and, as a
consequence, the Projected Stock would be zero in both periods. Key figure TR at
the Outer Border Arcs still would remain unchanged, i.e. would still contain no values,
as TR still is an input key figure to PU A. Key figure IPUTR would be updated by the
expected transport quantities, i.e. 10 units from DC3, 20 from DC4 and 20 from DC5
(in period 1).
If a user ran the S&OP Optimizer the example of Figure 28 could lead to a different
result as well. If parameter Compute Expected Supply was set to No then the
available supply from PU B and C is zero so that the optimizer would try to satisfy the
entire demand (PU DD) from DC2. If parameter Compute Expected Supply was set
to Yes then the optimizer might decide to receive the entire quantity from DC2 and
nothing from PU B and C or it might decide to receive the entire quantity from PU B
and / or C or any mixture of both depending on whether constraints limit the supply
from DC2 and depending on the IPU Receipts Cost Rate in comparison to the costs
for receiving the goods from DC2 (which include transportation costs from DC2,
inventory holding costs at DC2 and procurement or production costs at DC2). As
mentioned around Figure 18 the IPU Receipt Cost Rate has the key (product,
location). For that reason, DC1 pays the same procurement price independent
whether goods are received from DC3, DC4 or DC5. The optimizer therefore
evaluates PU-internal costs (from DC2) against PU-external procurement costs for
receiving goods from an upstream PU, i.e. in this example here PU B or C.
Figure 29 considers the same example as Figure 28, but the supply plan now is
computed by the S&OP Optimizer. Again PU A is selected, parameter Compute
Expected Supply is set to No and it is assumed that DC2 is not able to deliver
anything in period 1 (for instance due to a shutdown). Hence, the supply from DC2 is
zero. In contrast to Figure 28, now it is assumed that PU C was planned in the
meantime and that the responsible planner of PU C decided to ship 10 units from
DC5 to DC1 in both periods. As parameter Compute Expected Supply is set to No
the available supply from PU B is still zero (based on the fact that key figure TR is
still initial at the lanes from DC3 and DC4). As a consequence DC1 receives only the
10 units coming from DC5. As explained in the documentation Operators Key
Figures, section 4.4 the optimizer always copies key figure Receipts into key figure
Net Demand and Supply into Dependent Demand (as the optimizer does not
compute any demand key figures) which is the reason why these key figures are
equal to 10 as well. It is important to know that the SCM Operator updates output key
figure OLD (with a value zero or 10 in this example).
Page 38
For period 2 it is assumed that DC2 is able to supply 80 units. From PU C (DC5) the
supply is again 10 so that altogether the Receipts at DC1 are 90 units. (Note: From
Figure 28, however, we know that the Dependent Demand was 200 units.
Unfortunately this information gets lost when calling the optimizer which is
unavoidable as the optimizer does not compute demand key figures explicitly.)
Planning Unit A
DC1
D:
I:
N:
R:
S:
10 |
10 |
10 |
10 |
10 |
90
0
90
90
90
DC3
B
DC4
50%
OLD:
TR:
0 | 80
0 | 80
DC2
D:
I:
N:
R:
S:
D: Dependent Demand
I: Projected Stock
0 | 80 A
0|
0
0 | 80
0 | 80
0 | 80
N: Net Demand
R: Tot. Receipts
Planning Unit C
C
DC5
S: Supply
In Figure 30 we consider the same example as in Figure 29. The difference is that
the parameter Compute Expected Supply now is set to Yes meaning that the SCM
Operator can assume to get exactly the supply along the Outer Border Arcs which is
needed to satisfy the demand at DC1. As in period 1 DC2 still is not able to deliver
anything the entire Net Demand at DC1 is received from DC3, DC4 and DC5. The
received quantity is split over these three lanes according to their quotas which are
normalized to 100% for this computation. This means that 1/5 (= 20 units) of the Net
Demand is received from DC3, 2/5 (= 40 units) is transported from DC4 and DC5
each. It is important to see that key figure TR at these Outer Border Arcs is not taken
as input (this is the reason why the 10 units planned by PU C are ignored) and it is
not updated by the planning run (which is the reason why TR is still initial at the two
lanes to PU B and still 10 at the lane to PU C).
For period 2 it is again (as in Figure 29) assumed that DC2 is able to supply only 80
units so that the remaining 120 units are requested from PU B and C. Again these
120 units are distributed over the three Outer Border Arcs based on the normalized
Page 39
quotas so that finally 24 units are transported from DC3, 48 from DC4 and DC 5
each.
Planning Unit A
DC1
D: 100 |
I:
0 |
N: 100 |
R: 100 |
S: 100 |
200
0
200
200
200
Planning Unit B
B
DC3
B
DC4
50%
OLD: 0 | 80
TR:
0 | 80
DC2
D:
I:
N:
R:
S:
D: Dependent Demand
I: Projected Stock
0|
0|
0|
0|
0|
80 A
0
80
80
80
N: Net Demand
R: Tot. Receipts
Planning Unit C
C
DC5
S: Supply
Page 40
Planning Unit A
DC1
D:
I:
N: 100 | 100 | 100 | 100 | 100
R:
S:
50%
IPUDLD: |
|
|
|
OLD:
50 | 50 | 50 | 50 | 50
ATR:
TR:
|
|
|
|
|
|
|
|
DC3
D:
I:
N:
R:
S:
DC4
D:
I:
N:
R:
S:
Planning Unit B
DC2
D:
I:
N:
R:
S:
1|
2|
3|
4|
DC5
Planning Unit D
D:
I:
N:
R:
ATR:
Adj. Transport Receipts
IPUDLD: IPU Depend. Loc. Dem.
Figure 31: Initial Plan of Example with Multiple Incoming Sourcing Rules
We continue this example with Figure 32. It is assumed that the user selected PU C
to perform the S&OP Heuristic. Prior to the run of the heuristic he entered values in
key figure IPUDLD (in periods 2 and 5) and he entered values in key figure Adjusted
Transport Receipts ATR (in periods 3, 4 and 5) at the lane between DC1 and DC3.
(We have chosen the same values as for the example in Figure 24 as the logic of key
figures IPUDLD and ATR is analogous to the key figures AOCD and ACR. IPUDLD
and ATR impact the SCM Operators behavior at T-rules (between locations)
whereas AOCD and ACR impact C-rules (between customers and locations) in a
very similar way.
Based on these assumptions and input data the S&OP Heuristic computes the
supply plan shown by Figure 32. As PU C consists out of DC3 and DC4 the SCM
Planning Operator reads key figures IPUDLD and OLD as input and it then calculates
all key figures related with these two location products, among them the node related
key figures like Dependent Demand, Projected Stock, Net Demand, Receipts and
Supply and the arc related key figures as Transport Receipts. As DC5 belongs to PU
D which is not selected nothing is computed for that location product.
Page 41
Planning Unit A
DC1
D:
I:
N: 100 | 100 | 100 | 100 | 100
R:
S:
50%
IPUDLD: | 40 |
|
| 60
OLD:
50 | 50 | 50 | 50 | 50
ATR:
TR:
|
| 40 | 70 | 45
50 | 40 | 40 | 70 | 45
DC3
D:
I:
N:
R:
S:
50 |
0|
50 |
50 |
50 |
40 |
0|
40 |
40 |
40 |
40 |
0 |
40 |
40 |
40 |
70 |
0|
70 |
70 |
70 |
12 |
0|
12 |
12 |
12 |
13 |
0 |
13 |
13 |
13 |
14 |
0|
14 |
14 |
14 |
45
0
45
45
45
DC4
D:
I:
N:
R:
S:
Planning Unit B
DC2
D:
I:
N:
R:
S:
1|
2|
3|
4| 5
11 |
0|
11 |
11 |
11 |
DC5
15
0
15
15
15
Planning Unit D
D:
I:
N:
R:
ATR:
Adj. Transport Receipts
IPUDLD: IPU Depend. Loc. Dem.
As there are no Consensus Demands involved in this example the heuristic starts to
read the incoming demands which are the values in key figure IPUDLD or, if none
exists, values in key figure OLD. For that reason in period 1 the heuristic reads a
Dependent Demand of 50 units for DC3 and 11 units (10 from DC1 and 1 from DC2)
for DC4. The heuristic supplies the entire demand from both locations (50 from DC4
and 11 from DC4) and it updates key figure Transport Receipts (TR) accordingly.
In period 2 the value in key figure IPUDLD (40 units) is taken as incoming demand
for DC3 and hence the provided Supply is 40 as well. When the heuristic is chosen
the impact of IPUDLD and ATR is limited mainly to the Outer Border Arcs for which
these entries are defined. This is analogous to the functionality of key figures AOCD
and CR as explained in section 5.2.
It is remarkable that key figure OLD belongs to PU A and not to PU B. For that
reason OLD is not updated when PU C is planned and that is why the values in OLD
at the lane between DC1 and DC3 do not match with the values in key figure TR and
ATR at that Outer Border Arc (in periods 2, 3, 4 and 5). These OLD values will be
updated during the next planning run for PU A.
In period 3 the user limited the Transport Receipts to 40 units (by entering a value of
40 units into key figure ATR). As a consequence the SCM Operator over-rules the
Page 42
OLD while computing the Dependent Demand for PU C so that the Dependent
Demand is 40 (and not 50).
In period 4 the user set an Adjusted Transport Receipts of 70 units which is higher
than the sourced Net Demand of only 50 units at this lane. (This sourced Net
Demand is derived by the Net Demand at DC1 multiplied by the quota of that lane,
i.e. for the example here: 100 * 50% = 50 units). The heuristic therefore plans to
deliver 70 units. It is important to see that the S&OP Heuristic does not reduce the
supply via the second lane to DC1; from DC4 to DC1 it still transports the sourced
Net Demand of 10 units. This means the S&OP Heuristic does not balance the
quantities between the various lanes; as mentioned above the impact of key figure
ATR is limited to the Outer Border Arc for which it is defined.
In period 5 the user sets an IPUDLD value of 60 and an Adjusted Transport Receipts
of 45. This example shows that fixing the supply to 45 units dominates the IPUDLD
as the heuristic transports 45 units and not the requested 60. The S&OP Heuristic
does not increase the transport quantity at another lane (from DC4 to DC1 in this
example) to compensate the quantity below the requested demand. For that reason
the transport quantity from DC4 to DC1 satisfies only the sourced Net Demand at this
lane and not the missing 25 units from the lane above. Such a balancing is
provided by the S&OP Optimizer only as we will see in the sequel.
Figure 33 shows the result for the example introduced by Figure 31 when the
optimizer was called. Again, as assumed for Figure 32, PU A and PU B have been
planned before.
In period 1 the Net Demand which is sourced from PU A to PU C in total, the
Planning Unit Dependent Demand (PU DD(A->C)), is 60 units. The PU DD(A->C) is
the sum of the sourced Net Demands of all incoming Outer Border Arcs. In the
example of Figure 33 the PU DD(A->C) is: 100 * 50% + 100 * 10% = 60 units. This
PU DD is computed by the SCM Planning Operator right prior to the optimizer run
and it is passed to the optimizer as input.
As mentioned in conjunction with Figure 32, key figure OLD is not updated while PU
C is planned (and PU A and PU B are not selected). This means that the OLD values
at all incoming lanes to PU C do not match with their corresponding ATR and TR
value at this Outer Border Arc as they would do if this were inner arcs.
The PU DD(A->D) sourced from PU A to PU D is 40 units which however is not
considered here, as PU D is not selected for this planning session.
In period 1 the optimizer decided (for instance due to costs) to deliver the entire PU
DD(A->C) from DC3 and nothing from DC4 as shown by Figure 33.
Page 43
Planning Unit A
DC1
D:
I:
N: 100 | 100 | 100 | 100 | 100
R:
S:
50%
IPUDLD: | 40 |
|
| 60
OLD:
50 | 50 | 50 | 50 | 50
ATR:
TR:
|
| 40 | 70 | 45
60 | 50 | 40 | 70 | 45
DC3
D:
I:
N:
R:
S:
60 |
0|
60 |
60 |
60 |
50 |
0|
50 |
50 |
50 |
40 |
0 |
40 |
40 |
40 |
70 |
0|
70 |
70 |
70 |
45
0
45
45
45
2|
0|
2|
2|
2|
23 |
0 |
23 |
23 |
23 |
4|
0|
4|
4|
4|
30
0
30
30
30
DC4
D:
I:
N:
R:
S:
Planning Unit B
DC2
D:
I:
N:
R:
S:
1|
2|
3|
4| 5
1|
0|
1|
1|
1|
DC5
Planning Unit D
D:
I:
N:
R:
ATR:
Adj. Transport Receipts
IPUDLD: IPU Depend. Loc. Dem.
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 C1
PL1 P1 S1
D:
I:
N:
S:
R:
P: 10
AP:
PU C
PL1 C2
D:
I:
N:
S:
R:
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
R: Total ReceiptsI:
P: Production
AP: Adj. Production
Figure 34: Example with different PUs for output product and components
Page 45
It can be assumed that the supply plan shown by Figure 34 was computed by the
S&OP heuristic. As only PU was selected the heuristic computed demand and supply
key figures only for location product PL1 P1 and the connected arc-related key
figures (which are shown in red). The Dependent Customer Demand of 10 units
caused a Net Demand of 10 in that location product which is propagated as
Dependent Product Demand. However, as both components C1 and C2 belong to
other PUs (B and C) the demand propagation terminated in front of these two
location products. The heuristic simply assumes to get the requested demand of 10
units as supply (indicated by key figure Production Component).
Figure 35 shows the result of the heuristic after it was applied to PU B to plan
component C1 in plant PL1.
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 C1
PL1 P1 S1
D:
I:
N:
S:
R:
10
0
10
10
10
P: 10
AP:
PU C
PL1 C2
D:
I:
N:
S:
R:
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
R: Total ReceiptsI:
P: Production
AP: Adj. Production
The Dependent Product Demand (DPD) was taken as input for PU B and the
heuristic did fulfill this demand, as the corresponding supply is set to 10 units. This
supply is updated into key figure IPUPC (Inter-Planning Unit Production Component
Usage). This key figure is colored in green to indicate that it belongs to the
responsibility of the planner of PU B.
Page 46
Key
figure
IPUPC
is
an
is
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 C1
PL1 P1 S1
D:
I:
N:
S:
R:
10
0
10
10
10
P: 10
AP:
PU C
PL1 C2
D:
I:
N:
S:
R:
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
R: Total ReceiptsI:
P: Production
AP: Adj. Production
10
0
10
10
10
Figure 37 shows the result of a new run of the heuristic after the demand of product
P1 increased from 10 to 12 units. The heuristic propagated this higher demand
through the production source, but it did not change the plan for both components, as
they belong to different PUs.
By comparing the values in key figures IPUPC and PC the planner can see the
supply of the components which is currently requested by PU A and it can see the
actual supply provided by the delivering PUs, B and C. A difference, like in Figure 37,
indicates that expected and actual supply are not in sync and hence the planners of
the three PUs should synchronize their plans.
Page 47
PL1 P1
DCD: 12
D:
I:
N:
S:
R:
12
00
12
12
12
PL1 C1
PL1 P1 S1
D:
I:
N:
S:
R:
10
0
10
10
10
P: 12
AP:
PU C
PL1 C2
D:
I:
N:
S:
R:
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
R: Total ReceiptsI:
P: Production
AP: Adj. Production
10
0
10
10
10
Page 48
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 P1 S1
D:
I:
N:
S:
R:
P: 10
AP:
PU C
DC1 K2
D:
I:
N:
S:
R:
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
08
00
08
08
08
R: Total ReceiptsI:
P: Production
AP: Adj. Production
05
00
05
05
05
There are several alternatives how component supplies can be synchronized. One
option is that the planner of PU A sets the minimum component supply in key figure
Adjusted Production as illustrated by Figure 39. This seems to be the best feasible
solution if PU B and C cannot not increase their supply to the requested demand of
10 units. Figure 39 shows the resulting supply plan after PU A was re-planed by the
optimizer based on the value entered in Adjusted Production which enables PU A
to produce and hence to supply only 5 units.
In order to finally synchronize the component supply the planner of PU B would have
to re-plan its Planning Unit as well so that the actual supply of component C1 is
decreased to 5 units which is not yet done in the situation shown by Figure 39.
Page 49
PL1 P1
DCD: 05
D:
I:
N:
S:
R:
05
05
05
05
05
PL1 P1 S1
D:
I:
N:
S:
R:
P: 05
AP: 05
08
00
08
08
08
PU C
DC1 K2
D:
I:
N:
S:
R:
05
00
05
05
05
Dependent Demand
Projected Inventory
Net Demand
Supply
R: Total ReceiptsI:
P: Production
AP: Adj. Production
To use the optimizer in the context of production sources with output products and
components belonging to different PUs it is indispensable to populate an additional
cost key figure, the Inter-Planning Unit Receipts Cost Rate. (Technical name is
IPURECEIPTCOSTRATE, key is Product and Location). This key figure represents
the cost of each component for the use case in which only the PU of the output
product is selected to be planned by the optimizer. In this case, the optimizer uses
the values in this key figure as receipts cost of the components. Without these
receipts costs the price of these components would be zero which would not reflect
the reality and might direct the optimizer into a wrong direction. In use cases where
the components belong to the same PU as the output products or in use cases where
all involved PUs are selected (in the example here, if PU A, B and C would be
selected) the optimizer computes the costs of the components internally, based on
their procurement, transportation and production costs.
6.3 Co-Production
When assigning the main output product and co-products to different PUs this
complicates the planning process of production sources as well. Figure 40 shows a
supply plan, computed by the S&OP heuristic for a production source in which the
main output product (P1) belongs to PU A whereas its co-product (CO) belongs to
another planning unit, PU B. Component K1 belongs to PU C
Page 50
PU A
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 K1
PL1 P1 S1
P:
10
DPD:
10
PC:
10
IPUPC:
D:
I:
N:
S:
R:
PL1 CO S1
P:
10
PU B
PL1 CO
DCD: 05
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
D:
I: 10
N:
S:
R: 10
R:
P:
Total Receipts
Production
Figure 40 shows the supply plan which the heuristic computed after PU A was
selected. The arriving Dependent Customer Demand (of 10 units) for the main output
product P1 causes a Net Demand of 10 which triggers a Production Receipts of 10
(produced by production source S1) and which causes a Dependent Production
Demand (DPD) of 10 units for component K1. The example in Figure 40 is based on
a Production Coefficient of 1:1 between main output and co-product which means
that by producing 10 units of the main output product 10 units of the co-product are
produced as well. These 10 units of the co-product are depicted as Production
Receipts of location product PL1 / CO in the same quantity.
If now PU B, i.e. the PU of the co-product is planned, the heuristic will compute the
plan shown by Figure 41. As the demand for the co-product is 5 units only, the
Production Receipts determined by the main output product covers this demand
excessively so that the remaining quantity builds up a Projected Inventory of 5 units.
Page 51
PU A
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 K1
PL1 P1 S1
P:
10
DPD:
10
PC:
10
IPUPC:
D:
I:
N:
S:
R:
PL1 CO S1
P:
10
PU B
PL1 CO
DCD: 05
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
D:
I:
N:
S:
R:
R:
P:
05
05
00
05
10
Total Receipts
Production
A logical next step would be to plan PU C which delivers component K1. The result is
shown by Figure 42.
Page 52
PU A
PL1 P1
DCD: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 K1
PL1 P1 S1
P:
10
DPD:
10
PC:
10
IPUPC: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 CO S1
P:
10
PU B
PL1 CO
DCD: 05
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
D:
I:
N:
S:
R:
R:
P:
05
05
00
05
10
Total Receipts
Production
If Dependent Customer Demand for the main output product changes (as shown in
Figure 43, from 10 to 7 units), it makes sense to re-plan PU A. Figure 43 shows the
result of the heuristic.
The new resulting Production Receipts are immediately propagated to the co-product
which leads to a lower Projected Inventory (now only 2, before the change it was 5).
The reduced Production Receipts also decreases the Dependent Production
Demand for component K1.
Page 53
PU A
PL1 P1
DCD: 07
D:
I:
N:
S:
R:
07
00
07
07
07
PL1 K1
PL1 P1 S1
P:
07
DPD:
07
PC:
07
IPUPC: 10
D:
I:
N:
S:
R:
10
00
10
10
10
PL1 CO S1
P:
07
07
PU B
PL1 CO
DCD: 05
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
D:
I:
N:
S:
R:
R:
P:
05
02
00
05
07
Total Receipts
Production
As a reaction to the changed demand of the main output product P1, the other PUs,
i.e. PU B and C should be re-planned as well. The result is depicted by Figure 44.
The demand and supply of component K1 is adapted accordingly, nothing needed to
be changed for the co-product.
Page 54
PU A
PL1 P1
DCD: 07
D:
I:
N:
S:
R:
07
00
07
07
07
PL1 K1
PL1 P1 S1
P:
07
DPD:
07
PC:
07
IPUPC: 07
D: 07
I: 00
N: 07
S: 07
R: 07
PL1 CO S1
P:
07
PU B
PL1 CO
DCD: 05
D:
I:
N:
S:
Dependent Demand
Projected Inventory
Net Demand
Supply
D:
I:
N:
S:
R:
R:
P:
05
02
00
05
07
Total Receipts
Production
Page 55