APO Planning Scenario

[Former Member]

Dear Friends,

I really appreciate if anyone helps me out with a valuable solution for this scenario.

The scenario is we have 2 production plants A and B, plant A is owned by us and plant B is a contract manufacturer. We have 2 suppliers X and Y.

Letu2019s consider Plants A requires key component u201CPu201D to build the final product and they source the final product from X and Y.

Same Plants B requires key component u201CPu201D to build the final product and they source the final product from X and Y.

Plant X manufacture u201CPu201D which is considered as primary key component

Plant Y manufactures u201CP1u201D which is considered as substitute key component in place of component u201CPu201D. And this substitution occurs only when Plant X has no enough capacity to produce u201CPu201D.

Our requirement is to plan this scenario in APO CTM and the catch here is when we know the Plant X is not having enough capacity the demand should be fulfilled by the Plant Y with the substituted key component u201CP1u201D.

Regards

Sharath

[Former Member]

Typo Mistake. In the text above ... Please read the Statement as ...

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However SNP & CTM Optimizers Ignored the QUOTA ARRANGEMENTs upto SCM 5.0. I have read SDN documentation that there is functionality in SCM2007 (5.1) for Optimizers to look at Quotas. .....

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[Former Member]

Sharath,

It's good you've heard your Planners out .. thats important.

In any Implementation SCM-APO can never meet 100% of the Business Need as you want. There is 70-80% of a Solution at best and "Exceptions" need to always handled outside the system. Even JDE has not & neither will APO though it has much more rich functionality now in the latest SCM 5.1 release.

In this case ... the new scenario that you have described (which I obviously understand from the Supplier's point of view) is you want to give a Fixed Annual Demand to the Supplier Y to be able to Retain that High Quality Supplier. This Requirement as you know is in Contradiction to the Previous Requirement of Supplier X Capacity being utilized in Full in the original Question. No System can do BOTH at the same time.

A way to Fix Demand to Supplier Y will be to use QUOTA Arrangements to ensure enough demand for P1 procurement is generated. This means if in Plants A & B you have 2 BOMs 1 with Component P (procured from Supplier X) and one with Component P1 (Procured from Supplier Y) you have to Split the Manufacturing between the 2 BOMs on the Basis of Quota as per the Annual Volume (say last year). You can specify Fixed Quantities (not preferred) or a Fixed Percentage (preferred) in the Manufacturing Inbound Quota arrangement with Sources as the 2 PPMs.

However SNP & CTM Optimizers Ignored the Forecast upto SCM 5.0. I have read SDN documentation that there is functionality in SCM2007 (5.1) for Optimizers to look at Quotas. You will have to see this as I do not have access to a SCM 5.1 System as of now.

We may not need to do the Product Interchangeability at all as discussed on phone yesterday.

Please ... Please setup the Scenario as I described to you yesterday on call (use PPMs with different Priorities / Costs) for P & P1 in both the Plants. First Let's prototype this ... to Simulate your First Requirement ... then add the Complexity of Manufacturing Quotas for Producing via P & P1 and retest.

USE DIFFERENT PRODUCTs so you can DEMO both the Options to your Planners.

We should show the results of both the Options to your Client Planners and choose which option works best ... but remembering in mind that there is no such thing as a 100% solution. There are Unexpected Anomalies that happen in Real-Life that can never be Planned in a System. After all the Job of a Sophisticated Planning System is to Help the Planner become efficient, plan the 80-90% of materials automatically and not do away with his Job completely. are handled Manually. The Top 5-10% of "A" Items need to be always look at everyday & for some of it you can build Custom ALERTs to highlight the Shortage Situation as needed.

Anyway Net Net : I think you should Model both the Options in your System. Then let's discuss the results before you Demo both the Option Solutions to your Planners.

Hope this helps.

Regards,

Ambrish

[Former Member]

Hmmmm ....

Now that I understand this issue ... I think we have to pass the Purchase Reqs for only Component "P" to both Supplier X &Y from the BOM Explosions in Plants A & B.

At Supplier Y can you try to use "Product Interchangeability" the simplest form 'Discontinuation' to use P1 instead of P ?

(i.e : At Supplier Y consider P as 'discontinued' with P1).

I must say this not something I have done, but you have no option but to explore this approach in APO. The SCM help does say that CTM & Optimizer can use this is defined.

Read about "Product Interchangeability"

"http://help.sap.com/saphelp_scm50/helpdata/en/12/c40d3dba70fd1ee10000000a114084/frameset.htm

At Plant A & B also P should be replacable with P1, but P1 should not be part of the BOM of FG at A & B. I am not sure however what will CTM / Optimizer do first - replace P with P1 straightaway at Plants A & B without checking capacity of Supplier X (which we don't want) or will it first try to get P from both X & Y, then switch to P1 at both A, B & Y. I think at Plants A & B we can have "Alternative BOMs" for the FG 1 containing P the other P1 and we can put the Cost of the Second Mfg BOM (using P1) in PPM at A & B as very high (or Lower priority for CTM) compared to Primary BOM PPM in Plant A & B to see what APO will do.

This needs to be tried out. Infact I'd like to be in communication with you on this ... will separately talk to you.

Regards,

Ambrish Mathur

[Former Member]

Dear Ambrish,

I really appreciate for today's discussion.

Today I had a meeting with the planners. This is how they explained their pain area, sort of twisters ;)o This may be helpful for our future discussion.

Currently, we plan P entirely in a set of complicated Excel sheets because we cannot plan them in JDE. Too many factors are outside of JDE. One complication is that we have an alternate source of supply for P=>P1, from Plant Y. Plant Y is a critical development partner and also a critical backup source for P. This part is very difficult to manufacture - requires technical skill on the line and technical engineering support. Plant Y has supported us for many years and is more experienced than Production Plant X. We have no other source. We must ensure they remain viable and profitable, and thus we must ensure we provide adequate, steady volume to them. We know their capacity, as we help to set it. We have engineers on site regularly and own equipment there.

Demand for FG comes from both Plant A and Plant B. The demand is erratic because FG is erratic, because of ECs and because of erratic fallout of key components P/P1. Additionally, the lead time is long to China ( ie Plant B [contract manufacturer]), and that is where the highest demand variability is found as well as the highest fallout.

Therefore, we keep Plant Y demand as flat as possible and absorb the variability at the Plant X. We buffer the variability with inventory as much as possible, yet the inventory is expensive so we need to balance this.

Plant Y makes some key components which Plant X doesn't make, Plant X makes one key component which Y doesn't make; they both make a couple of identical key components, and they also make a roll which is interchangeable ie P=>P1 in function but is physically different, so it has two PNs.

Plant X => Production Plant for P

Plant Y=> External supplier for P1 (interchangeable component)

Plant A=> Own Production plant for FG which uses P/P1 depending on demand variablity

Plant B=> Contract Manufacturer for FG which uses P/P1 depending on demand variablity

I read the functionality of interchangability.

Capable-to-Match (CTM) supports the following types of product interchangeability:

• Simple Discontinuation of Products

• Form-Fit-Function Classes (FFF Classes)

I feek FFF may suite our requirements but not sure. Do let me know your views for the same.

If you find any new solution do let me know.

Regards

Sharath

[Former Member]

Sharath,

First of I have not Implemented SNP "CTM" handson but more on the SNP "Optimizer" which is also a way to generate a Result for the same Business Scenario that you have described. However my understanding is that "CTM" works off more on "Priorities" and "Optimizer" works more on "Costs".

If you have a BOM in Plants A & B using Component "P" to setup in both X & Y. My understanding from your query is that Requirement to Produce "P" by Supplier Y should go ONLY when Supplier "X" does not have enough Capacity to meet the Requirement.

To do this you have to Model ...

- 4 Lanes from Plant A & B to Procure "P" from BOTH

X & Y supplier. The Lanes should give Higher Priority to Plant X than to Plant Y.

- Production Capacity Planning at both X & Y and assign different Priorities to both (or Costs if you use Optimizer)

i.e : PPM in Plant X has Lower Priority / Cost of Manufacturing than PPM in Plant Y.

SNP PPM can be created by converting from PPDS PPM which can be created by CIFing from R3 to APO via Production Versions defined in R3 with BOM & Routing.

- If Demand (Forecast) for Product is in both A & B or comes to A & B from Warehouses via Stock Transfer PRs then

SNP PPMs at Plant A & B need to be created for the Finished Goods anyway which after running SNP (CTM or Optimizer) will create the Dependant Requirements for Component P which will go to X first based on Priority and then to Y next based on next lower Priority.

It is possible that for the Lanes from A & B to X & Y you may need to give Equal Priority so that the decision to Produce P at X or Y is based ONLY on Manufacturing Priority / Cost which should be Lowest at Supplier X. This is because I do not want all requirements of A & B for P to go to only X.

I have Implemented this scenario using FGs only between Warehouses and Plants. i.e : When Warehouses have Demand they go to Primary and Alternative Plant based on the "Costs" of Mfg via the Optimizer. I think CTM runs off similar concepts but based on "Priorities". So this should work.

Can you Please try to Model this & revert back. Hope this helps. If it does please award.

Regards,

Ambrish Mathur

[Former Member]

Hi Ambrish,

Thanks for your valuable answer. Sorry I have not given you complete details. So please see the below mentioned additional details.

The catch in my question was when there is no enough capcity to produce in P in X supplier plant the demand (Production) has to switch to Y supplier plant and here the key component P will be substituted by key component P1. Mean to say when there is no enough capacity in X for producing P planning has to trigger the Y to produce P1. We are not using PPM in our planning we are using PDS.

Plant X has BOM1 with key component P

Plant Y has BOM2 with Key component P1

When there is no enough capacity at X planning has to switch to plant Y where it will produce P1 (A substitute component for our Primary component P)

P is our key component number

P1 is supplier Y key component number which has same charateristics but different in numbering

I appreciate if you come up with a valuable answer.

Thanks

Sharath

Edited by: Sharath chandra Nanjunda Reddy on Oct 8, 2008 5:41 PM

[Former Member]

Hi Sharath,

I am sorry if I was not clear, but Capacity Check is also done by the Optimizer while checking if P should be procured from X or Y. This will be based on the Manufacturing Capacities of Product P. Normally SNP will go to only to Supplier Plant X for P based on Lower Cost / Higher Priority and when Capacity in the Bucket is full at X ... SNP will shift Procurement to Supplier Plant Y. SNP will shift Procurement of P from X to Y based on not only Cost / Priority but also based on Capacity that is modelled in the PPM / PDS in Supplier X & Supplier Y.

You can have BOM in Supplier Y having P1 as the Component instead of P and SNP will explode whatever BOM is present.

I think CTM works in similar fashion as Optimizer ... only one major difference is it used "Priorities" that you can define in the PPM or PDS.

Hope this helps. I would suggest Please Model this and revert back with Issues. My Gut feeling is CTM should do this (my experience for sure is SNP optimizer with Costs works).

Regards,

Ambrish Mathur

[Former Member]

Hi Ambrish,

Thank you for your valuable answer.

In your last reply you have mentioned I can maintain BOM for Supplier Y having P1 component instead of P. Can you educate me more on this scenario? How the system will know if the capacity at X is full it has to switch to supplier Y with BOM having P1 (P being substituted by P1). Can you please educate me more on this? Can I use any substitution method for this? If yes how can I use subtitution.

Please check the below scenario so that we both are on same page.

The scenario is we have 2 production plants A and B, plant A is owned by us and plant B is a contract manufacturer. We have 2 suppliers X and Y. Source of supply X is owned by us which is in different location. Source of supply Y is external supplier.

Letu2019s consider Plants A and B requires key component u201CPu201D (Primary component) to build the final product and we source the final product from X which is owned by us. When plant X has no enough free resource capacity to fulfill the demand we source the from Supplier Y. The source of supply u201Csupplier Yu201D supplies component P1.

Key Component P can be substituted by P1 when Plant X is not having enough capacity to produce P. P1 has same functioanlity of P.

We know the capacity of supplier Y i.e., 200k every week.

Regards

Sharath

Edited by: Sharath on Oct 20, 2008 5:52 AM