Any ideas for this Business requirement

[Former Member]

Hi All,

Just wondering to see if any of you have encountered the following business requirement and if so how we can address it.

Business Requirement:

(1) Distribution Centers(DC Plant) maintains a relationship with the Factory(Production Plant) that can allow for the swapping of planned production of one product with the planned production of another product. This relation can allow for the partial or complete swapping of one unit of planned production with another in the group.

Example: Product Group1 has 2 products underneath it- Product A and Product B

n= Current period (Month)

n+1= Next period.........

After n+4 periods, the production qty are as follows:

Prod qty@ Product A = 10

Prod qty@ Product B = 30

Hence the Production Qty@ Product Group 1 = 20+20 = 40 ( Aggregation of the prod qty from products to product group level)

The swap of production can be btw Product A and Product B and should not exceed the total Production Qty for the product group

Some examples can be:

Prod qty@ Product A = 15

Prod qty@ Product B = 25

Total Prod Qty@ Product group 1= 40

Prod qty@ Product A = 20

Prod qty@ Product B = 20

Total Prod Qty@ Product group 1= 40

Prod qty@ Product A = 30

Prod qty@ Product B = 10

Total Prod Qty@ Product group 1= 40

etc etc........lot of combinationsu2014The above examples are for understanding the requirement.

However let us say the business determines a planned % of swap btw the products:

Example:

Total Prod Qty@ Product group 1= 40

Swap % = 10%

Then the new Production Qty with the Swap% are as follows:

Prod qty@ Product A = 10 + (10*10/100) = 11

Prod qty@ Product B = 30 + ( 30*10/100) = 33

(2) The other requirement is that the ATP check of the Sales Orders should take into account the Production qty with swap% at the individual product level and also constrain it with the total production qty for the Product group

Example: Let us say we have a

SALES ORDER for Product A for Requested Qty=40

SALES ORDER for Product B for Requested Qty=40

The confirmation for the above 2 sales orders should be as follows:

Confirmation for SALES ORDER for Product A =11 qty

Confirmation for SALES ORDER for Product B =29 Qty

The total confirmation is still equal to the original production qty for the Product Group= 40 qty

Thanks

Kumar

[Former Member]

Kumar

For the first requirement, what SAP SCM process/ module is this for ? For example, are you looking to do this in SNP heuristic/ CTM/ Optimizer source selection ? Or do you want to place DP forecasts after the swap directly on the Factory ?

For requirement 2, you can use the product allocation functionality in GATP. If you have DP forecasts, then you can use that as the basis for allocation planning.

Rishi Menon

[Former Member]

Hi Rishi,

Thank you for the reply.

Regarding the first requirement- there is no specific SNP engine I am looking into right now, just wanted to hear how others address the overall business requirement or come up with a new design which involves complete business process change

Regarding the second requirement- you are right that " product allocation" can be used to address this requirement for which I already have in place a design which involves a 2 step allocation procedure- first step@ product Allocation@ product group 1- second step@prod alloc@ product-A and Product-B

My proposal to the business which involves Business Process Change from their current way of doing things is more of a standard SAP approach:

Do a ATP check only till a certain period( inside the firm supplies and before the swap production period/unfirm supplies) using checking horizon. Outside the checking horizon, all the sales orders will be confirmed and then using SNP come up with a plan taking into consideration the sales order demand entered for product-A & product-B and communicating with the factory.

Once we receive a firm production plan with the factory which is inside the checking horizon, ATP check happens against the firm supplies.

Any other refinements/comments/ suggestions to this proposed idea are welcome.

Thanks

Kumar

[Former Member]

Kumar

I dont know what flexibility you have in building the solution - are you looking at a greenfield from-scratch solution or do you already have a ltechnical andscape that you need to work with ?

If its the former then here is what might work -

1. Using APO DP, you generate a 'Sales' Forecast (based on statistical models + adjustments). This is a statement of unconstrained independent demand, for the products they actually expect to sell.

2. Using SNP, you (optionally) check the sales forecast for capacity.

3. As part of the S&OP process, you make any adjustments in DP to develop a 'Consensus' (and optionally constrained) Demand Plan.

4. Within DP, in the very near term you disallow any changes to the Consensus Demand Plan ('Frozen' Horizon) since it would be too late for manufacturing to react to changes. In the medium term ('Slushy' horizon), you allow changes only within the Product Group, using the swapping process you describe. Further out (Liquid horizon), you follow steps 1 through 3, with any changes acceptable.

5. Usng GATP, you can use the same forecast created within step 1 or 4 to limit what can be ordered using Product Allocation.If the products within the product group are interchangeable from a customers perspective, then you can use Rules Based ATP to switch products.

Rishi Menon

[Former Member]

Hi Rishi,

Thanks again.What you have described is a typical S&OP process.

My apologies for not mentioning the following 2 constrains at our client:

(1) There is no Demand Planning/Forecasting- Actual sales orders are entered in the system- Currently they manually manage the ATP consumption of the SO's by entering them in a sequence.

(2) The supply is firm and there can be no changes made even into part of the liquid horizon- I know it sounds weird- but this is the process

Let me know if you can think of anything else.

Thanks

Kumar

[Former Member]

Kumar

I dont see how you could do this in SNP or PPDS. Interchangeability will not work, since it wont support the interactive changes that you need.

Even if you dont use DP for Sales Forecasting, it might still be a place to do the swapping you are looking for. I've seen companies use DP for high-level production planning (not BOM explosion, just for finished goods).

Rishi Menon