Category Archives: SPP
Misnaming of Periodic Order Quantity in SPP
Background
SAP has a habit of creating its own terminology when standard terminology is already accepted and in general use. I pointed this out previously with their misuse of the terms leading indicator and extended warehouse management. Both of these terms have different usage than the way that SAP uses them. Leading indicator is not even a term in supply chain. My issue with SAP terminology goes back to 1997 when I was in SAP SD training and the instructor was speaking about material determination. After 10 minutes or so I realized that SAP was referring to product substitution. I got up and addressed the class that this terminology was not correct and unnecessarily confusing.
Why Do This?
I feel like this helps out people are tying to figure out SAP SCM and may think that SAP has created a new term that is part of supply chain management, when in fact it is not. I have never been able to figure out if the misuse of terms is due to genuinely not knowing the correct term to use, or some type of obscure marketing reasons.
EOQ POD?
The latest incorrect term is the term EOQ Period. In SPP there exists two options with regards to ordering quantity for child locations. SAP offers EOQ, and what they call EOQ POD, or period. The path for this configuration is
IMG: APO –> Supply Chain Planning –> SPP –> DRP –> Make General Settings for DRP
Here you can see I have selected EOQ Period. However, the term EOQ Period is not a term in inventory management. You can look through supply chain and operations research books and not find it. I tested this by checking with Google Books.
There were only 8 hits, and they were either SAP publications or mis-hits as you can see above where EOQ and period are separated by a comma and not an actual term.
The correct term for an economic order quantity that is triggered by the passage of time rather than the hitting of a certain quantity is Periodic Order Quantity, or POQ.
Why SPP Has Its Own Alert Monitor
Background
In a previous post I described how the SCM Alert Monitor is comprehensive, but not necessarily all that flexible in how metrics can be combined in order to create alerts.
If you see the screen shot below you will notice that the Alert Monitor segments is alerts into the different modules in SCM, more or less.
What some people should find interesting is that SPP is not included in this list, and that SPP has the most configuration screens for the Alert Monitor of any of the modules, as the configuration screen shot below can attest.
SPP not only has an Alert Monitor like the other modules in SCM, but has the following monitoring categories as well.
A few examples of these alert configurations are shown below.
It is interesting, because setting up the system this way is a departure from how things have been done with the alert system in the previous modules. The main reason seems to be is that the SPP development team wanted to create so much more alert functionality for SPP that they decided they could not effectively fit it within the confines of the previous alerts. However, this is not the first time I have seen this. I have commented in previous posts that the SPP development team really seems to be taking a different approach from standard SCM in a number of areas (the DRP Matrix is another example of this).
Forecast Consumption in DP and SPP
Background
Something which is quite interesting is how DP and SPP differ in terms how how they manage forecast consumption. Consumptions is when the forecast is reduced by an actual sale. The sales orders subtracted from the forecast is how forecasting departments both measure their forecast error and how they determine realization of the forecast.
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Application Comparison Corner
Probably one of the best applications at measuring and displaying forecast realization is Right90. They have a realization directly in the interface (although, Right90 is a collaborative forecasting tool, unlike DP and SPP which is are purely statistical tools and should never be used for consensus forecasting.) Amazingly, I have seen DP used as a consensus tool by companies that were ill advised by large consulting companies. This never works out.
To find out a a bit about Right90 see this post.
http://www.scmfocus.com/demandplanning/2010/09/right90-for-forecast-bias-removal/
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DP can be set to consume the forecast in the following ways.
To read more about the specifics, see this post.
http://www.scmfocus.com/sapplanning/2009/11/02/advantages-and-disadvantages-of-dp/
How it is Done in SPP
Interestingly, SPP does not allow any forecast consumption at all. This is not unusual for service parts, that is MCA Solutions also does not have sales orders consume the forecast. Therefore, this is a significant change in doing things from people coming from finished goods planning where forecast consumption is the rule.
Protected: SPP Capture Historical Demand in Action
How Capture Demand Fits In With the SPP Forecast Workflow
Background
Capture Demand is an unnecessarily complicated method for getting history from SAP ERP, CRM or other system into SPP. In fact, it is both the most complex method for getting history into a system I have ever seen, and is significantly more complex than getting history into DP. Unfortunately, because demand history must be updated every month or week (depending upon the forecasting periodicity) this means that this method must be replicated on a frequent basis in order to keep the demand history up to date.
Interactive Adjustment
Capture Demand brings in demand history into a process called Manage Demand History. Supersession and Stocking / De-stocking activities (such as when a part moves from stocked to de-stocked and when a supersession chain is setup) and they flow into something called Realignment. You can read about the stocking and de-stocking realignment here.
http://www.scmfocus.com/sapplanning/2008/09/29/spp-stocking-and-destocking/
Read about supersession in SPP here.
http://www.scmfocus.com/sapplanning/2009/04/18/spp-supersession/
Realignment and Interactive Adjustment is what makes up the Manage Demand History process in SPP. The connection looks like this.
