Overview

SAP (Advanced Planning and Optimizer) or SAP (APO)is the planning component within the mySAP
SCM solution. APO is an acronym for Advanced Planner and Optimizer. This is a large component of
SAP's New Dimension products. APO is an entire suite of supply chain planner applications that increase
overall knowledge of the supply chain and provide forecasting, planning and optimization. There are eight
application levels within SAP APO: network design, supply network planning, demand planning,
production planning and detailed scheduling, transportation planning and vehicle scheduling, global
availabilty and supply chain collaboration.
The SAP APO is not a standalone application and requires a backend ERP system such as SAP R/3 for
the execution. SAP R/3 communicate with SAP APO using the the APO Core Interface (CIF) which
supplies SAP APO with the master and the transaction data in the real time. Interaction between the SAP
R/3 at backend and the SAP APO is in real time and any data related to the production, the sales or the
supplies is immediately transfered from one system to another without requiring any batch processing.
The efficient way of installing some standard SAP APO scenarios is by reference to the SAP Best
Practices for Supply Chain Management.
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Modules within SAP APO




Supply Chain Cockpit

Demand Planning - a toolkit of statistical and collaborative forecasting techniques.
Supply Network Planning - used to calculate quantities to be delivered to a location in order to
match customer demand and maintain the desired service level.
Global Available to Promise - uses a rule based strategy to ensure you can deliver what you
promise to your customers.
Transportation Planning / Vehicle Scheduling - optimizes transportation route and schedules
vehicle resources.

Service Parts Planning
Production Plan / Detailed Scheduling - create procurement proposals for in-house production
or external procurement to cover product requirements and optimizes the same.

Demand Planning Process
Purpose
This process describes each activity in the Demand Planning (DP) cycle. In general, you can assume that
the order of the processes presented here is the order in which you should proceed through the DP cycle.
However, since DP is represented as a cycle, not a linear path, you may decide to repeat certain activities
or to proceed in a different order.

Process Flow
The following diagram depicts the DP cycle.

1. It is a collection of parameters that define the scope of all . Carry out all the steps needed to set up your planning area. The planning area is the basis for all activities in APO Demand Planning.

Monitor exceptional or critical situations through the Alert Monitor. customers. regions. coupons. 2. Create a forecast of market demand using a top-down. 15. Map the structure of your company (for example. You load into the data mart the actual history (for example. Plan promotions and other events. middle-out. coupons. consensus forecast. 9. Reconcile the demand plans of different departments by merging the plans into a one-number. and to closely match supply and demand. Result The result of Demand Planning is the demand plan. and so on) who will participate in demand planning by designing planning books.planning tasks. 8. Define macros to perform calculations. causal analysis and/or composite forecasting. 11. discounts. This allows you to create feasible plans for purchasing. Forecast new products and discontinued products by applying lifecycle planning and "like" modeling techniques. 13. The planning area is linked to the data mart. dealer allowances. Update the actual data. with actual data and with other demand planning versions that you did not release to SNP. Using this model. A comparison of the two plans could lead. Fine-tune the demand plan by adding management overrides and modifications. Make the demand plan available in SNP by releasing it. 4. Configure the layout of the planning screens for the different parties (departments. Choose from a wide variety of forecasting methods and techniques. products and customers) for planning purposes in the DP master data. or bottom-up approach. Process Flow . 6. The demand plan is often unconstrained by any production or distribution restrictions. 7. 16. 3. Revise the master data to reflect the addition of new products. This step can be completed by either the demand planner or the SNP planner. bookings. you can synchronize activities and plan the flow of material along the supply chain. by comparing it with the constrained forecast from SNP. Verify the accuracy of the forecast. 10. Define forecast models for time series forecasting. 12. for example. and so on. and warn you of exceptional situations. Make the SNP plan available to DP by releasing it. shipments or billings) that wlíll be used to create the DP master data and generate the demand forecasts. and transportation. managers. divisions. and advertising. inventory. for example. Examples of promotions are free-standing inserts. carry out tests. Add new models for new products and product lines. 18. contests. 5. manufacturing. The SNP plan takes into account any production or distribution restrictions. trade shows. 14. Simulate different planning scenarios. brands. to the opening of a factory to meet demand in a new market region. Supply Network Planning Process Purpose Supply Network Planning enables you to model your entire supply network including all of the associated constraints. Refine the forecast models in the light of knowledge gained from forecast accuracy checks. product displays. divisions. 17. Store the forecasts made at different times for a period.

not all activities are mandatory. Also.The following diagram depicts the Supply Network Planning cycle and SNP’s integration with other APO components. you can assume that the order of procedures presented in this document is the order in which you should proceed through the cycle. you may need to repeat certain steps or to proceed in a different order. However. • Planning Area Administration . In general.

. heuristic planning. or Capable-To-Match results in a mid-term production and distribution plan. supply & demand propagation. products. resources. Then you make the settings in the appropriate profiles for each of the methods for which this is required. It is a collection of parameters that define the scope of all planning tasks. The planning area is the basis for all activities in APO Supply Network Planning. If you use. products. resources. • Release Demand Plan to SNP You release the demand plan from Demand Planning to Supply Network Planning. you can also level resource capacity to resolve problems from the interactive planning table. They can also be used to perform mass maintenance of product master data. Master data for Supply Network Planning includes locations.Carry out all the steps needed to set up your planning area. and/or safety stock planning. including all prerequisite steps Performing the supply network planning runusing the Heuristic. This step can be carried out by either the demand planner the SNP planner. In the SCE. Supply & Demand Propagation. for example. and PPMs to a model. You may need enter additional master data specifically for the method that you are using. the master data must be set up with care to achieve the desired results. You can assign the model to several different versions for simulative purposes. and maintain quota arrangements. • Interactive Planning After the Supply Network Planning run. The version is also used for the release of the Demand Plan (final forecast) to Supply Network Planning. • Supply Chain Model Setup You set up the supply chain model for Supply Network Planning in the Supply Chain Engineer (SCE). and production process models (PPMs). • Model/Version Creation You must create a model name before you set up the model in the Supply Chain Engineer (SCE) and assign the model to at least one version. Optimizer. Whether you plan to use the Heuristic. allocate products to the transportation lanes. • Supply Network Planning Run You execute planning based on the methods you chose. Optimizer. you assign the locations. or Capable-To-Match (CTM). • APO Master Data Setup Supply Network Planning is a very master data-intensive component of APO. • Supply Network Planning Method Determination and Profile Settings You determine which of the following methods to use for your planning: optimization. The demand plan is often unconstrained by any production or distribution restrictions. Capable-To-Match planning. and vice-versa. the Heuristic planning method. you review the plan in the interactive planning desktop. You then add transportation lanes to link supply to demand locations. These profiles can be changed on the fly for simulation purposes.

you can build transportation plans manually. it is included in the cycle because production planning and detailed scheduling is usually performed before running Deployment and Transport Load Building. the Deployment run generates confirmed transport orders. In PP/DS. In PP/DS. so you must make changes in the promotional planning strategy in DP. you convert supply network planning orders into PP/DS orders to make them available for production planning and detailed scheduling. For transport orders that could not be satisfied during the TLB run due to specified constraints.• Release of Supply Network Plan to Demand Planning You release the final supply network plan back to DP for comparison of the unconstrained demand plan to the constrained supply network plan. • Conversion of SNP Orders into PP/DS Orders This is not part of part of the Supply Network Planning process since it can only be executed in Production Planning and Detailed Scheduling (PP/DS). However. re-planning. APO Global Available-to-Promise (Global ATP) Purpose . • PP/DS Planning This is not part of the Supply Network Planning process because it can only be executed in PP/DS. you may release the supply network plan back to DP if the capacity situation cannot cover demand created by a promotion. • Transport Load Building The Transport Load Building (TLB) run groups the confirmed transport orders resulting from the Deployment run into transportation plans. which are included in the Supply Network Planning interface. and. Major discrepancies between these two plans could trigger re-forecasting. • Deployment Run After production planning is complete and the system knows what will actually be produced (this information is stored automatically in liveCache). For example. it is included in the cycle because this step is usually performed before running Deployment and Transport Load Building. However. ultimately. you create a viable production plan based on the planned orders generated in Supply Network Planning.

companies operating worldwide are forced to globalize available information in order to conduct business efficiently.Increasingly. By specifying parameters. which are prescribed by enterprises and customers. Global ATP is one of the central methods of the SAP APO server that utilizes liveCache. the results of the check should be analyzed. Depending on these rules. this means that information has to be made available across system boundaries as quickly as possible to provide optimized decision support. Implementation Hints For the business objectives of Global ATP. you can subsequently modify the check in the simulation and then investigate and display the effects of these modifications. See also: Backorder Processing Basic Methods Advanced Methods Rules-Based Availability Check . The data is stored in liveCache in the form of time series’. Global ATP can be used in heterogeneous system landscapes to provide necessary information as quickly as possible. a technology in which data is stored in the form of time series’. and the dates and quantities for product availability should be determined. this means that executing the check can depend on rules determined solely by a process that was just carried out. Specifically.

for example. PP/DS is designed to plan critical products. is provided by a connected OLTP System. with long replenishment lead times or that are produced on bottleneck resources.Explanation and Simulation Basic Methods of the Availability Check Use The elementary methods of the global availability check are called basic methods. where you perform execution functions. Products are planned in the APO System and the planning results are then transferred to the OLTP System. Integration The data relevant for planning. With PP/DS you can create executable production plans and • • • • Reduce lead times Increase on-time delivery performance Increase throughput of products based on better resource coordination. Requirements data from long and medium-term . Reduce inventory costs because the work in process inventory is reduced as a result of better coordination of product release. See also: Product Availability Check Product Availability Check Using Checking Horizons Shortage Check Characteristics-based Product Availability Check Product Allocations Check Against the Forecast Production Planning and Detailed Scheduling (PP/DS) Purpose The component Production Planning and Detailed Scheduling (PP/DS) enables you to plan and optimize multi-site production while simultaneously taking into account product and capacity availability. such as master and transaction data.

Set up the Supply Chain Model Use the Supply Chain Engineer (SCE) In the SCE. see Integration of APO and R/3. You control which data is to be transferred to and from the OLTP System in the integration model of the core interface. resources and production process models (PPM) to a model. The following diagram represents the integration between an OLTP system and the APO system and its components: Integration within APO and with an OLTP System The following table shows how PP/DS is integrated with the OLTP System and other APO components: Integration with Other APO Components and an OLTP System To Procedure Other Information Set up master data Transfer the master data from the OLTP System and maintain the necessary data in the APO System The OLTP System provides PP/DS with master and transaction data. products. You then add transportation lanes to link supply . For more information.planning can also be transferred to PP/DS within APO from Demand Planning and Supply Network Planning. you assign the locations.

multi-level transfer of changes to quantities and dates Using pegging. Perform execution of orders Use the connected OLTP System For example. This enables up-to-date planning data in both systems. You can also to convert specific individual orders that are outside the production horizon. The system generates a pegging structure that is organized according to the BOM structures of all relevant products.to demand locations and to allocate products to the transportation lanes. Transfer the planning results of Supply Network Planning to PP/DS for more detailed planning Convert the orders that lie in the production horizon into PP/DS orders. Make the unconstrained forecast (from Demand Planning) available in PP/DS Release the demand plan to Supply Network Planning Requirements that fall within the production horizon and thus the planning responsibility of PP/DS. the APO system creates a relationship between the receipt and requirements elements of a product within a location. The dynamic pegging structure ensures that quantity or scheduling changes are transferred to orders at lower levels of the BOM structure. • Interactive Planning . The result is feasible availability dates for the product and its components. unexpected or critical situations in the PP/DS planning process Access the Alert Monitor You can define which types of alerts you would like the system to generate and display. goods receipt. • Automatic. With automatic planning. Features • Automatic Planning You can define that the System is to plan products automatically in PP/DS when you change orders or data relevant to planning in the APO System or the connected OLTP System. Perform an ATP check using Global ATP and PP/DS Create a sales order in the connected OLTP System If the result of the ATP check is to produce. the system checks the availability of resources and components when orders are created. Display exceptional. are transferred directly to PP/DS. Global ATP calls up PP/DS to determine the availability date while taking product availability and capacity into account. confirmation.

which consists of the two partial components Transportation Planning and Vehicle Scheduling. detailed scheduling functions or optimization for a large number of objects online or as a background job. is described in this section.You can use interactive planning for important products that you wish to plan manually and to solve any planning problems that have arisen during automatic planning. • Heuristics and Background Planning o Heuristics You use heuristics to solve specific planning tasks for selected objects (depending on the focus of planning: products. o Optimization Using the optimization tool. resources or line networks) using a particular planning procedure algorithm. you can optimize the resource schedule according to certain criteria. Constraints The component Production Planning and Detailed Scheduling is a planning tool. operations. You can apply heuristics both during interactive planning and during the production planning run. purchasing and so on. Interactive planning is supported by the following tools: o Detailed scheduling planning board In the DS Planning Board the planning situation and resource schedule are displayed in Gantt charts. o Production Planning Run You use the production planning run to execute heuristics. You use the detailed scheduling planning board to reschedule orders or operations manually. several heuristics or functions can be executed one after another. It enables the transportation planner to optimally use the . such as shop floor control with confirmation. to improve the planning situation and solve particular detailed scheduling problems. During the production planning run. Execution functions. Transportation Planning/Vehicle Scheduling Purpose The Transportation Planning/Vehicle Scheduling (TP/VS) component. must be performed in an OLTP system. such as setup times and setup costs. o Product planning table You use the product planning table to plan the production quantities for products and the schedule of the production lines.

it requires a tool that also supports a multi-level dynamic order split. ships. as is the case with traditional planning approaches. trains. planning strategies control the sequence of supply consumption and multi-level BOM explosion. complement this application. . such as yield and process times. In addition. Capable-To-Match performs a quick check of production and transportation capabilities. Because SDM is order-based.until mid-term planning horizon and guarantees a timely multi-level synchronous production flow. Integration Multi-Level Supply & Demand Matching complements Supply Network Planning and Production Planning in APO's multi-site Supply Chain Planning strategies.available capacity of trucks. not production resource-centric. SDM aims at a short. To exploit the given production capabilities to their maximum – as is necessary in the high tech industries – a capacity check down to operation level is performed. For more information. an order-based method of Supply Distribution. Like other APO Supply Network Planning strategies. as well as on time-dependent process parameters. floworiented view of the supply chain. see: Transportation Planning Vehicle Scheduling Planning for Vehicle Scheduling Interfaces TP/VS Master Data Transportation Management Multi-Level Supply and Demand Matching Purpose Multi-Level Supply & Demand Matching (SDM) is the umbrella for APO’s solution for matching a large set of prioritized customer demands and forecasts to a set of supplies while taking into account the current production capacities and transportation capabilities. as well as a tool that provides a graphical. instead of considering the supply chain production level-by-production level. In addition. CTM’s focus is multi-site production processes based on resource allocation rules. and airplanes with the goals of planning more efficient loading capacity and lowering costs. triggering flow only when it is necessary. Capable-To-Match (CTM) is the central planning tool of Multi-level Supply & Demand Matching. SDM focuses on the supply chain. since most customers depend completely on external transportation companies nowadays for optimum transportation (which means deliveries that are on time and cost saving). SDM’s approach is production flow-centric.

such as sales orders or forecasts from Demand Planning. . CTM supports all dimensions of the APO decision cube: • • • Product substitution capability Multi-level propagation. CTM Supply Categorization is performed based on user-defined inventory limits. CTM’s Focus Focus Explanation Order-Based Supply & Demand Matching Demands are first prioritized and then planned individually. different replenishment sites can be balanced using quotas. product priority or order category. CTM Demand Prioritization prioritizes these demands based on specific characteristics. First Served'. On the one hand.such as order priority. BOM explosion Multi-site planning Features Capable-To-Match • CTM Demand Prioritization Using demands currently in liveCache. Traceability of the result supports the analysis and understanding of the result. different production processes or transport lanes can be given preference using priorities. inventories or planned deliveries) in liveCache. On the other hand. A feasible plan is proposed while taking into account the constraints in supply chain. for example. Demand Prioritization Demand prioritization provides you with the possibility to rank the demands based on predefined characteristics . Further criteria can be added. • CTM Engine The CTM Engine matches the demands to the supplies while taking into account the production capacities and transportation capabilities. The overall strategy is 'First Come.Finally. these characteristics can be easily combined. In addition. • CTM Supply Categorization Based on the supplies (for example. Control of the Supply Chain Several business targets can be modeled and considered while planning. Priorities and Quotas Priorities and quotas can be used to control the flow within the supply chain.

where infinite material and capacity can be made available. a simulation can be executed based on a planning scenario that has been slightly modified to measure the quality by performance indicators. In addition. to satisfy the demand before planning the production. and incremental changes to. such as fulfillment strategies and product/location substitutions. Time-Phased Process Parameters Such parameters can be used to fit the real planning situation. as well as alternative products. Concurrent Material and Capacity Planning Unlike classical MRP. the master data checker provides a summary of all master data information downloaded to the CTM Engine. customer-oriented rules. the entire supply network.Replenishment Policies Explicit safety stock replenishment and a targetdays’-supply approach support guaranteeing delivery. taking into account the CTM specific requirements as well as general data requirements. . can be derived for CTM planning using the APO rule evaluation component. Planning with Down Binning By using the substitution rules of products. CTM searches all available supply of the required product. CTM Master Data Checker This can be used to cross-check the entire supply chain for consistency. Rules-Based Planning By taking into account the characteristics combination of the demands. Special Features of CTM Feature Explanation Search Strategies The searching process for a given demand can be carried out stepwise for the different supply categories as well as for production and transports. Master Data Selection Master data selection for the planning run allows you to handle a subset of master data of. CTM Engine The CTM Engine runs on a dedicated server. What-If Simulation and Analysis To support strategic network planning. CTM takes into account available supply as well as the current capacity profile simultaneously.

To do this. . and considering the amount of demands. the CTM Engine is tuned to handle higher volumes of data.Because of its linear complexity. the engine is supported by ILOG’s constraint-based programming library Solver and ILOG’s scheduling library Scheduler.