Tag Archives: Product Location Master

Leading Indicator Forecasting in SPP

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What Is It?

A statistical forecast based on sales history is not the only type of forecast that is used in SPP. Sometimes the forecast needs to be based upon factors other than history such as installed base. For instance in A&D, the forecast can be more accurately executed based on installed base rather than historical sales. Leading indicators is a causal forecasting method. (This could be flight hours, or other equipment utilization numbers. These are also called causal factors, or non-demand factors and are notoriously hard to find in company databases.)

If you have information about the failure rate, you can define that in a coefficient. The system then multiplies this coefficient with the equipment that is on the market and can thus forecast how many service parts you will require in the future. The steps generally are:

  1. Equipment source must be tapped and extracted (equipment BOMs, installed based key figures, equipment master data from the BW)
  2. We then bring this into BW, perform a LI preparation service.


Then we select leading indicator folder.


SAP supplies the following leading indicators

  1. Installed base
  2. Operation time
  3. Number of users

You can also define your own leading indicators in addition to the ones provided by SAP. (You must assign the same leading indicator to all locations of a BOD.)

SPPLFISERVICE for Coefficient Determination

These leading indicators are then assigned to a planning profile. You need to select the SPPLFISERVICE. This service is the coefficient determining service. The system generates the demand histories for the leading indicators used. It then uses these histories to determine a value for the coefficient for each period in the past. To do so, it executes the planning service SPP: Preparation Service for Leading Indicator Based Forecast (SPPLFISERVICE).However, you do not need to run the LFI service. If you select either CONSTANT VALUE or MANUALLY ENTERED off of the Leading Indicator tab of the forecast profile. This leads us to an intermediate topic – the Foreast Profile Leading Indicator Tab. Goto this link to read this related topic. Then return to this post. Alternatively, open both posts and read them side by side.

http://www.scmfocus.com/sapplanning/2008/10/02/spp-leading-indicator-forecast-profile-tab/

Here is the SPPLFISERVICE, it is a standard service and can be accessed by creating a planningprofile and by attaching the service to this profile.


/N/SAPAPO/480000009


The service is in the product simple category.


Now we have selected the correct Process Profile category we can go to the next step and select the SPPLFISERVICE.


Now we can access this service by selecting this Leading planning profile that we just created.

If you use period based planning, SPP generates the forecast for a product either on the basis of past sales values or on the basis of leading indicators. If you can not meet your demand within your BOD, SPP covers demands either through external procurement or repair.

SPPFCSSERVICE for Forecasting

This generates the demand histories and performs forecasting. However, you can use the interactive forecasting screen instead. /N/SAPAPO/SPPFCST

On the other hand you can also tie up this service in a planning profile.


STEPS

  1. Based on the demand history generated in step one, the system generates the forecast for the leading indicator and the coefficient. For this you can either schedule the planning service SPP: Forecast Service (SPP_FCS_SERVICE) which generates the demand histories, or you can start the forecast manually in the interactive forecasting screen. This generates the forecast for the leading indicator. In doing so, it proceeds as specified by you in the Leading Indicator Values field on the Leading Indicator tab page in the forecast profile. You have the following options.

a. Forecasted – In this case the system performs the forecast on the basis of the demand history and takes into account the forecast profile that you have defined for the leading indicator

b. Determined from the Installed Base – In this case the system performs a naive forecast. I reads the values from the demand history from the InfoCube SPP: Installed Base Key Figures (9AIBASKF), and copies the value of the current period as the forecast value for future periods

c. Upload / Manually Entered – In this case you can either enter the forecast values manually in the Interactive Forecasting screen or upload them with a BADI

3. The system determines the leading indicator based forecast for your location product on the basis of the forecast values for the leading indicator and the coefficient. As in step 2, this step is either part of the planning service SPP: Forecast Service (SPP_FCS_SERVICE) or part of the interactive forecast that you can start manually in the Interactive Forecasting screen. To generate the leading indicator forecast for your location product, the system multiplies the forecast values of the leading indicator determined in step 2a by the forecast values of the coefficient determined in step 2b. it does so for each period in the future

4. You can display the calculated forecast values on the Interactive Forecasting screen.

Equipment Data

You can load equipment data into SCM from ECC via BI. In the standard, the system transfers equipment data from ECC into the characteristic 0EQUIPMENT in SAP BI. You must schedule this transfer in SAP BI with an InfoPackage.

Overall Sequence

1. The preparation service for leading indicator based forecasting checks all products of the product selection as to whether they are part of a supersession. If a product is part of a supersession, the preparation service checks whether the supersession is a one to one replacement. It is only in this case that the preparation service takes into account this supersession in leading indicator based forecasting. The preparation service for leading indicator based forecasting of the predecessor and successor product then generates a demand history as described below. The preparation service checks whether you have set the read BOM of LI flag in the service profile for the preparation service.

a. If you have set this flag, the system reads all equipment BOMs for the ERP system and check how often a product occurs in which equipment BOMs

b. If you have not set this flag, the system sets an equipment equal to a product.

2. The preparation service checks whether you have restricted your equipment with a selection in customizing or whether you want to take into account all equipment in leading indicator based forecasting. If you want to restrict the equipment taking into account in leading indicator based forecasting, you can define an equipment selection in Customizing. You can specify the semantics and values or value ranges for these semantics that the system is to take into account or not take into account in the selection.

3. The preparation service determines an entry location for all products of the product selection and checks, which leading indicator group you have assigned to this entry location. The system only performs step 4 for those leading indicators that are included in this leading indicator group.

4. If the installed base leading indicator occurs in your leading indicator group, the preparation service distinguishes between the installed base leading indicator and all other leading indicators as follows.

a. The preparation service determines the demand history of the installed base leading indicator form the information from step 1. To do so it counts how often a product occurs in total in all checked equipment BOMs. If you are not using equipment BOMs and an equipment corresponds to a product, the system only counts the equipment.

b. The preparation service determines the first stockholding locations for the product. To do so, it determines at which location the demand for the equipment occurred. If this location is a stockholding location, it determines this location is the first stockholding location. If this location is not a stockholding location, it goes up in the BOD until it finds a stock holding location and determines this location as the first stockholding location.

Whether a location is a stocked location is set here in the SPP Inv. Planning tab on the product location master.

replenishment-indicator
Here the tab for leading indicator has a number of selections which determine if the leading indicator forecast is to be selected from installed based or are manually entered. The coefficient is then used to adjust your mean time between failure.

Forecast Service Profiles


Now we will discuss the planning service indicator.


For details on the Planning Service Manager goto our post on the topic at….

http://www.scmfocus.com/sapplanning/2008/09/28/spp-planning-service-manager

Just some initial screen shots which will be commented further from the forecast profile.


BADI

To define your own logic of wish to use the ATP check for determining the first stockholding location, you can implement the BADI /SAPAPO/EQUIPFIRSTSTOCK_PREP


ATD and Safety Stock

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Often undiscussed is the effect of safety stock on the available to deploy quantity or ATD. However, as stated in the book Supply Chain Management with SAP APO:

Having the ATD-quantity defined, it is distributed cording to the deployment settings defined in the location product master. Safety stock is ignored by deployment (at least by the deployment heuristic). Since safety stock is modeled in SAP APO™ as a demand and not a supply element, this means that safety stock settings do not have any impact on the available quantity.


Lean Inventory Management in SAP SCM

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Ahhhhh the joys of going Lean. It’s like betting your supply chain performance that benefits will accrue if you just have faith, lower inventory and hope for the best. Didn’t Toyota do this? Some of the Lean philosophies are a bit daffy, however, this article describes how there is a kernel of truth to Lean. 

What This Article Covers

  • Why Lean was applied to supply planning from production planning.
  • What settings are adjusted in SCM to enable Lean?
  • What are some of the maintenance issues with Lean in SAP SCM?

What Drives Lean?

Lean is driven in part by a dissatisfaction in the output from supply planning systems. This dissatisfaction can stem anywhere from MRP’s logic being overly simplistic see this article on one professors’s view that MRP is not a planning system.  (http://www.scmfocus.com/supplyplanning/2012/03/04/is-mrp-a-planning-system/) Another reason is that executives are often looking for a magic bullet to reduce inventories and Lean in a way promises this.

The Big Lean Trend

Currently there is a great focus on the topic of Lean. However, if we consider Lean a form of repackaged JIT, this infatuation with inventory reduction based upon a philosophy goes back to the mid 1980s. I am disappointed that so little is discussed of JIT’s failures because this is a historical fact. In fact, there is quite a media blackout on this, if one looks up the term JIT and failure or anything close to it, there are very few results in Google. The book Factory Physics has the following comment on JIT:

…MRP II was roundly criticized in the 1980s, while Japanese firms were strikingly successful by going back to methods resembling the old reorder point approaches. JIT advocates were quick to sound the death knell of MRP. But MRP did not die, largely because MRP II handled important non-production data maintenance and transaction processing functions, jobs that were not replaced by JIT.

Lean today is similarly anti-planning method. For those unfamiliar with the topic, Wikipedia has a very nice history of Lean. Interestingly, while “Lean manufacturing” has a listing on Wikipedia, any other type of lean related to supply chain does not. This is surprising given how many lean supply chain planning projects are currently underway.

Applying Lean to the Supply Chain

Lean, as applied to supply planning, really boils down to two general thrusts.

  1. The ability to collaborate with suppliers, thus increasing pipeline visibility in order to reduce the disintegration of order sequence that continues to mar supply chain.
  2. The ability to either apply reorder point planning or to adjust parameters in the supply planning system so that orders are more frequently made and less inventory is carried (even though total costs increase). More on reorder points planning is covered here (http://www.scmfocus.com/supplyplanning/2012/03/04/reorder-point-planning/)

SNP has the ability to incorporate information from suppliers (as does pretty much any supply network software) so there is no gap with the first requirement. However, the second requirement (the ability to apply reorder point methods) is what we will get into now.


Many of the actual proposals from Lean are old candy in a new shell. My research and consulting experience tell me that some products should be put on reorder point planning, however, I would not say that this is some new concept. 

The Product Location Master

The reorder point controls sit primarily on the Product Location Master in SAP SCM/APO. I have placed a screen shot of the Lot Size Tab below.


As can be seen, there are not a lot of alternatives provided here. Just the basics. The reason for this is rather easy to explain, these reorder points are not designed to actually control the planning (that is supposed to be performed by heuristics, an optimizer or CTM), but rather these order points are used to moderate the order creation. On most SCM implementations, the products which are not considered critical are pushed to SAP ERP, where the reorder point methods are actually more comprehensive. SAP seems to be saying that reorder point planning will be performed less frequently in SAP APO/SCM than SAP ERP, which makes sense.

The controls above allow you to set the reorder point as a days supply, or as a quantity. When one moves to reorder point planning, the heavy lifting for determination of the quantities or duration is calculated outside of SAP.

Conclusion

The use of Lean in supply chain planning should not be accepted uncritically and simply because it is trendy. However, while Lean contains a lot of hyperbole, there is a kernel of truth to the ineffectiveness of supply planning methods (Lean advocates often criticize MRP, however without a reliable forecast, no supply planning methods — DRP, Allocation, Cost Optimization, MEIO, works very well), under some circumstances. Lean advocates much less frequently use the issue of planning effort versus reward, however the argument can be made from that perspective as well.

When and Why Should Items Be Placed on Reorder Point Planning? 

Items placed on a reorder point methodology should be placed there for the right reason. This includes the following:

  • They are not critical.
  • They are difficult or impossible to forecast…or they have a level forecast.
  • Their supply is unconstrained.

Any product in these categories are essentially either not worth the effort to plan with more advanced methods, or advanced methods do not add value to their planning over the simpler method of reorder point planning.

References 

http://en.wikipedia.org/wiki/Lean_manufacturing

Factory Physics, Wallace J. Hopp and Mark J Spearman, Waveland Press, 2008

Questions or Comments? 

How do you perceive the connections between Lean and reorder point planning? Do you a have a similar or different viewpoint from the article? If you have experiences to share please comment below. 

Shelf Life in SNP

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Shelf Life Planning
Where Is It?

On the properties tab of the product location master.

Shelf Life
There is also something called a shelf life profile.

http://help.sap.com/saphelp_scm70/helpdata/EN/46/1da486078b5a68e10000000a1553f7/content.htm

Is It Respected?

However, the second question is whether it is respected.

Shelf life is covered is used in the optimizer, but not in CTM until version 7.0.

Planning applications in Supply Network Planning (SNP) do not consider shelf life data, with the exception of the SNP optimizer that considers shelf life in a restricted way. For more information, see Stock Planning. – SAP Planning. – SAP Help

You have checked that the Plng with Shelf Life indicator in the product master on the Properties tab page is set to enable the shelf life function. The system sets this indicator automatically when transferring product master data with shelf life from SAP ERP - SAP Help

However, you can propagate shelf life data of demands along the supply chain to set the shelf life data of orders created by planning. After propagation, an alert function enables you to identify mismatches between shelf life requirements and actual shelf life, as well as product quantities that are about to expire. – SAP Help

I have never seen shelf life work properly, as I have described this fact in this post.

http://www.scmfocus.com/sapplanning/2010/03/27/shelf-life-planning-in-snp-does-not-work-and-likely-will-not-in-the-future/

References

http://www.sap.com/spain/company/events/2008gestioncadenalogistica/pdf/6Killer%20Applications%20Day%20SCM%202008_SNP.pdf

http://help.sap.com/saphelp_scm70/helpdata/EN/46/1da416078b5a68e10000000a1553f7/frameset.htm


Master Data – Rounding Profiles

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What Is the Purpose?

This simply rounds the value up to the next increment for ordering. Very similar to the lot size (in fact you should check to see how it different from the lot sizing on the Product Location Master)

(Consecutive number that identifies the level of the rounding profile. A rounding profile can be assigned several levels. For a rounding profile, you can define several threshold values with different rounding values. The threshold values must each be assigned to a level. You have to enter the levels, threshold values and rounding values in ascending order. During the lot size calculation later on, the system, however, uses the opposite procedure: It tries to determine rounding levels and thus rounding values as large as possible.) – SAP Help

They are created here in the IMG: