SNP Optimizer Unlimited procurement

[Parth_Soneji]

Hello Experts

We have a scenario where we have limited supply of raw materials per bucket. Now as this is not stock, we cannot model it as actual stock and even if we do, it will be available as of today and not per bucket (in future buckets). We have a requirement where we receive raw material per month. Now, to incorporate this in the Optimizer model, we have created dummy plant from which our production facility will procure the raw material. At dummy location, we model the limited supply of RM as planned orders per bucket so as to limit the supply to production plant.

Now we have a situation where if do not maintain the procurement costs for RM at production plant, the limited supply procurement works out fine. Optimizer considers only planned order quantities as available and procures only from dummy plant. But if I change the procurement cost to be 1, even if there are no other sources of supply for this RM, Optimizer simply procures available quantities from dummy plant, and the remaining quantities needed to produce forecast quantities from unknown source of supply (purchase requisition and not a stock transfer). This is wrong as this is not considering the raw material availability in the model which we want to.

Now let me explain the need to set the procurement cost. If I do not set the Procurement cost, there is another issue. We have two different products being produced which consumes different quantities of RM. One consumes 1000 PC and another 950 PC. So if I do not set the procurement cost, it keeps producing the product which consumes 950 PC so as to optimizer the production plan (It assumes so). However, I have a requirement of producing in the order of highest profits (Non Delivery=revenue, we are using Profit Maximization in Optimizer profile). I have set the non delivery, storage, transportation, production costs. It simply ignores all this calculation (Profit), when I do not set procurement costs, because it assumes it will be better off saving some raw material.

Hence, we are in a fix. If we set procurement cost - purchase requisitions are being created unnecessarily. And if we do not set procurement cost - our profit maximization goal is not achieved and it produces the products which consume lesser RM and does not consider the revenue and costs we have setup per product.

We want to set the procurement cost and still generate only stock transfers and not purchase requisitions. We want to tell the Optimizer that there is only one source of supply (Dummy location) from which it should procure. Please let us know if you have any suggestions.

Thanks

Parth Soneji

[Parth_Soneji · Accepted solution]

Hello everyone,

We have been able to achieve the desired with the help of BADI implementation to reset the flag "Procurement allowed", using Profit Maximization and by making the differences between the Non delivery costs of the products very high to compensate for the costs Optimizer saves by producing the FG material which consumes less Raw material.

Thank you everyone for your help.

Best Regards

Parth Soneji

[Former Member]

Hi soneji;

My understanding in the above Issue by maintaining procurement cost system creates unwanted purchase requisitions. To get out off this problem you can change the settings of the optimizer profile in spro as PR's block for planning in SNP Block planning.

Hope so it helps the problem defect...

Regards;

Arava Santosh

[Parth_Soneji]

Hi Arava

Can you please specify which setting in Optimizer Profile are you talking about?

Thanks

Parth Soneji

[Former Member]

Parth,

If you set the procurement cost, Optimizer will create Purchase requisitions (blank source of supply) in place of STOs (our expected source of supply - Dummy Location), because then it will try to procure externally in order to produce an optimum supply plan. But if you do not specify a procurement cost, optimizer will not consider external procurement as an option. We have seen the same behavior in our scenarios.

Are you using notional costs? If so, try tweaking transport cost and storage cost (instead of procurement cost) to get the desired results.

Hope that helps.

Shweta Gupta

[Parth_Soneji]

Hello Shweta

Thanks. Yes, I infact implemented a BADI to reset the procurement allowed flag in input log of Optimizer so as to stop PReq getting generated even when Procurement cost is set.

However, the proposal by Optimizer is still the same. It proposes to produce the product which consumes less Raw material and does not generate proposal according to the profit (Nondelivery cost - Production cost - Transportation lane cost). We are using the actual costs, but I even tried with notional cost and it is not giving any different result.

Optimizer seems to be assuming that it is better off by saving some raw material when it produces FG A as compared to FG B. But I have maintained very high non delivery costs. I even tried with cost profile - setting relative multiplier of ND cost as 9 and other costs as 0.01 so as to balance this assumption which Optimizer makes for RM consumption. However, this is not helping either.

Best Regards

Parth Soneji