1.  Tata consultancy services Production Planning Sales and Operations Planning

2.  Tata consultancy services Copyright

3.  Tata consultancy services Course Prerequisites SAP overview MATERIAL MASTER,BOMs,Routings,Work center overview. Concepts of planning in industry.

4.  Tata consultancy services Target Group Audience: Production planing department Process owners Duration: 3 days

5.  Tata consultancy services Introduction: Contents Course goals Course objectives Course content Main business scenario

6.  Tata consultancy services Course Goals To understand role of sales and operation planning functionality. To create and implement optimum production plans in SAP This course will enable you to:

7.  Tata consultancy services Course Objectives Use the R/3 system to create sales and operation plans effectively.. Optimize the resources using feasible plans. At the conclusion of this course, you will be able to:

8.  Tata consultancy services Contents CONCEPTS of SOP Components of SOP Information structures Planning Methods Consistent planning Level-By-Level Planning Delta Planning

9.  Tata consultancy services Contents (cont..) Planning Hierarchy Product Group Planning Types and Macros The Forecast in SOP Forecast Models Forecast Parameters

10.  Tata consultancy services Contents Resource Leveling Resource levelling in Standard SOP Rough-Cut Planning Profiles Version Management: Concepts Active versus Inactive Versions Aggregation and Disaggregation

11.  Tata consultancy services Contents (Cont..) Strategies for Creation of Production Plans. Transferring SOP Data to Other R/3 Applications Transfer to Demand Management. Exercises Solutions

12.  Tata consultancy services CONCEPTS of SOP. Sales & Operations Planning (SOP) is a flexible forecasting and planning tool Sales, production, and other supply chain targets can be set on the basis of historical, existing, and estimated future data. Rough-cut planning can be carried out to determine the amounts of the capacities and other resources required to meet these targets. SOP is used to streamline and consolidate company’s sales and production operations. SOP is particularly suitable for long- and medium-term planning.

13.  Tata consultancy services CONCEPTS (Cont..) SOP constitutes the planning functionality of the LIS information systems. SOP plans are passed on to Demand Management (PP- MP-DEM) in the form of independent requirements. This data is fed to Master Production Scheduling (PP-MP- MPS) and Material Requirements Planning (PP-MRP).

14.  Tata consultancy services Components of SOP. SOP is made up of two application components: Standard SOP (PP-SOP) : Pre configured module supplied by SAP. Flexible Planning (LO-LIS-PLN):  For customized configuration.  Planing can be done on any organizational level (for example, sales organization, material group, production plant, product group, material, or even entire enterprise), and also the content and the layout of the planning screens can be defined.

15.  Tata consultancy services Information structures The Sales & Operations Planning (SOP) application is based on information structures. An information structure is a statistics file containing operational data(Like anticipated planning data or actual data that happened) An information structure contains three kinds of information: characteristics:A criterion according to which data records are selected.Provides information (such as plant,material, sales organization or purchasing organization) with reference to which other information is cumulated key figures:A criterion for evaluating the performance.Provides information (for example, invoiced sales or invoice value) which is cumulated with reference to characteristics a period unit: Gives the structure a time reference

16.  Tata consultancy services Planning Methods The planning method determines how data is distributed to different corporate units. Three planning methods are available: Consistent planning: Level-by-level planning Delta planning

17.  Tata consultancy services Consistent planning Planning levels are interdependent changes made at one planning level immediately affect all other planning levels. The system performs aggregation and disaggregation at runtime. Planning is based on a self-defined information structure

18.  Tata consultancy services Level-By-Level Planning Data is stored at all planning levels. You can plan each planning level separately. Planning levels are independent of each other. Plans at different levels need not necessarily be consistent. Both top-down and bottom-up planning are possible. Standard SOP is based on info structure S076. system can predefine the proportional factors of characteristic values automatically, on the basis of existing (actual or planned) data.

19.  Tata consultancy services Delta Planning Data entered at one level is aggregated automatically to higher levels at runtime. Changes made at one level are not automatically disaggregated. The difference remains between the sum of the individual values at the lower level and the total shown at the higher level.

20.  Tata consultancy services Planning Hierarchy A planning hierarchy represents the organizational levels and units in the company for which planning is done. characteristic values A planning hierarchy is a combination of characteristic values based on the characteristics of one information structure. Planning hierarchies provide a framework for planning activities in consistent planning and level-by-level planning. With these planning methods, a planning hierarchy must exist for the information structure before you can plan its key figures. You can create only one planning hierarchy for an information structure

21.  Tata consultancy services Product Group product group data is planned in standard SOP. A product group combination of other product groups and materials according to whatever criteria best meet the needs of an enterprise. Product groups are classified according to whether they are mutli-level or single-level. A product group is multi-level if it contains other product groups. However, the lowest level in a product group hierarchy always consists of materials. A product group is single-level if its members are materials only.

22.  Tata consultancy services Planning Types and Macros A planning type is a customized view on the planning table; A planning type is based on an information structure. planning types provide a flexible tool for the planning, storage, and analysis of any logistics data. A planning type defines the content and layout of the lines in the planning table as well as the mathematical operations, in the form of macros, which can be performed on these lines.

23.  Tata consultancy services The Forecast in SOP To estimate the future progression of values in a time series on the basis of past history using With the forecast,. either online or in the background. In standard SOP and Flexible planning the sales quantities of a product group or material using forecast.. In level-by-level planning, the forecast for a material can be done based on the consumption quantities of a "reference material." The historical data is automatically aggregated to the current planning level before the forecast is carried out.

24.  Tata consultancy services Forecast Models When a series of consumption values is analyzed, it normally reveals a pattern or patterns. These patterns can then be matched up with one of the forecast models listed below: Constant  consumption values vary very little from a stable mean value Trend  consumption values fall or rise constantly over a long period of time with only occasional deviations Seasonal  periodically recurring peak or low values differ significantly from a stable mean value Seasonal trend  continual increase or decrease in the mean value Copy of actual data (no forecast is executed)  copies the historical dataupdated from the operative application, which you can then edit Irregular  no pattern can be detected in a series of historical consumption values

25.  Tata consultancy services Forecast Parameters The forecast parameters are dependent on the forecast model. Constant models: First-order exponential smoothing model Alpha factor First-order exponential smoothing model with optimization of the smoothing factors : none. Moving average modelNumber of historical values :Number of historical values Weighted moving average model:Weighting group

26.  Tata consultancy services Forecast Parameters (Cont..) Trend models: First-order exponential smoothing model:Alpha and beta factors Second-order exponential smoothing model:Alpha factor Second-order exponential smoothing model with optimization of the smoothing factors:none Seasonal model:Winters' method::Alpha and gamma factors and Periods per season Seasonal trend model: First-order exponential smoothing model Alpha, beta, and gamma factors and Periods per season

27.  Tata consultancy services Forecast Parameters(cont..) Weighting group This field is to be Maintained if the forecast model "weighted moving average” is selected. This key specifies how many historical values are included in the forecast and how these values are weighted in the forecast calculation. Periods per seasonal cycle For the seasonal model or if you want the system to carry out a seasonal test. The following factors are used by the system, depending on the model, for exponential smoothing. Only the alpha and the delta factors are required for the constant model, whereas all the smoothing factors are required for the seasonal trend model.

28.  Tata consultancy services Forecast Parameters(cont..) Alpha factor The system uses the alpha factor to smooth the basic value. If an alpha factor is not specified, the system will automatically use the alpha factor set in the profile. In the standard SAP profile, this is the factor 0.2. Beta factor The system uses the beta factor to smooth the trend value. If a beta factor is not specified, the system will automatically use the beta factor set in the profile. In the standard SAP profile, this is the factor 0.1.

29.  Tata consultancy services Forecast Parameters(cont..) Gamma factor The system uses the gamma factor to smooth the seasonal index. If a gamma factor not specified, the system will automatically use the gamma factor set in the profile. In the standard SAP profile, this is the factor 0.3. Delta factor The system uses the delta factor 0.3 in every forecast model to smooth the mean absolute deviation.

30.  Tata consultancy services Resource Leveling Effective resource planning is vital to the realization of operational targets. Viability of targets in terms of the resources required to meet them can assessed with SOP’s resource leveling function. SOP’s resource leveling function enables us to take the resource load into account when planning, Resource levelling allows to directly check how changes to plans affect the resource situation. plans can be adjusted to make optimum use of available resources.

31.  Tata consultancy services Resource levelling in Standard SOP You perform resource leveling for the production quantities of a product group or material. The following resources are possible: work center capacities, materials, production resources/tools and costs. These resources are recorded in a rough cut planning profile. Work center capacities may also be read from a routing or rate routing. Resource leveling may be carried out for the active version or any inactive version in a single-level planning screen.

32.  Tata consultancy services Rough-Cut Planning Profiles Rough-cut planning profiles are used in resource leveling. In a rough-cut planning profile, the requirements of one or more of the following resources are planned: Work center capacities Materials (typically, raw materials) Production resources/tools Costs These are the resources required to meet a sales target, production target, purchasing target, or any other logistic target that has been set for a material, product group, or characteristic value combination.

33.  Tata consultancy services Rough-Cut Planning Profiles (Cont..) Rough-cut planning profiles are designed to give an aggregate view on the resources; that is, on workdays rather than hours or minutes, and work center groups and product groups rather than individual work center or products. They are therefore an ideal tool for medium- and long-term planning or for the planning of hierarchies. The resources table displays a lot of information at a glance, that is, the resources required not just for the final assembly but for the entire production process, starting with the lowest-level components and ending with the finished product. Planned resources are displayed in the periods to which they relate.

34.  Tata consultancy services Rough-Cut Planning Profiles (Cont..) In a rough-cut planning profile, the following are defined: The material, product group, or (in the case of an information structure) combination of characteristic values requiring the resources. The key figure causing the resource load (if the rough-cut planning profile is defined for an information structure). The time span of one planning period in the resources table, expressed in workdays. The status of the rough-cut planning profile (as in a routing). The planner group of the rough-cut planning profile (as in a routing). The usage of the rough-cut planning profile (as in a routing).

35.  Tata consultancy services Rough-Cut Planning Profiles (Cont..) How much of which resource is required for the base quantity. The base quantity; that is, the number of units for which the resource is required. The lot size range if the quantity of the resources required depends on lot size. Different lot sizes can have different base quantities. For example, a lot size of 1-10 may have a resource requirement of 1, and a lot size of 11-100 a resource requirement of 10.

36.  Tata consultancy services Version Management: Concepts Sales & Operations Planning (SOP) allows you to plan the same information structure as often as you like Each planning version is stored under a version number with a description. Different planning scenarios can be constructed for one information structure. A version number is numerical and consists of three digits.

37.  Tata consultancy services Active versus Inactive Versions Only one planning version of an information structure is "active". This is version A00. All the other planning versions are "inactive". The version of the information structure that contains actual as opposed to planned data is version 000. A version is automatically active if it is the only planning version that exists for an information structure. If several versions exist, the active version is the first one created.

38.  Tata consultancy services Active versus Inactive Versions (Cont..) The active version contains the version of planning data that is to be regarded as valid, Use inactive versions as test versions to try out different scenarios. In standard SOP, versions of plans for different product groups and/or materials are all stored in information structure S076. Copying Versions copying of any version of an information structure to any other version of the same information structure is possible.

39.  Tata consultancy services Aggregation and Disaggregation In SOP both top-down and bottom-up throughout a complex planning hierarchy can be done Thus, both centralized and decentralized planning are supported. This functions are known as aggregation and disaggregation. In SOP, aggregation is the process by which planning data at an aggregate level is generated through the totaling, copying, or averaging of key figure values at a more detailed level.

40.  Tata consultancy services Aggregation and Disaggregation (cont..) Disaggregation, on the other hand, is the process by which planning data at a detailed level is generated through the distribution of key figure values from an aggregate level. The planning method in standard SOP is level-by-level planning; aggregation or disagregation, if desired, is triggered by the user.

41.  Tata consultancy services Strategies for Creation of Production Plans Five strategies are available for this purpose: Stock balance No production plans are created for the product group members. Target days’ supply The production quantities of the product group members are calculated such that a target days’ supply is met. Target stock level:System calculates the production quantities needed to achieve target stock levels Stock level = zero: System uses any existing stock to cover sales quantities. When this stock has been used up, production quantities are planned in synchronization with sales quantities Synchronous to sales The production quantities of the product group members are calculated such that they are the same as the sales quantities.

42.  Tata consultancy services Transferring SOP Data to Other R/3 Applications Transfer to Demand Management. Demand Management determines the requirement dates and requirement quantities for important assemblies and specifies the strategies for planning and producing / procuring finished products in the form of planned independent requirements. Sales orders eventually consumes planned requirements and triggers updating to the Sales Information System. This ends the phase of SOP.

43.  Tata consultancy services Main Business Scenario Production plans have to be created every quarterly/half yearly or annualy. Existing production plans have to be modified to meet changing situations. Feasibility of plans have to be done.

44.  Tata consultancy services Exercise

45.  Tata consultancy services SOLUTIONS

46.  Tata consultancy services Structure and Concepts of the Planning Table Sales and operations planning in the "planning table". The planning table is made up of two areas: a header area an input matrix The appearance of these two areas depends on which master data and which key figures you are planning. Header Area The header area shows which master data you are planning. This may be a characteristic values combination, a product group, or a material. information on the planning version: the name of the version, the description of the version, and whether the version is active or inactive.

47.  Tata consultancy services Structure of planning table (cont..) Input Matrix: The input matrix is laid out in rows and columns. In the left column, key figures which are being planned; In the right column, the unit (unit of measure, currency, or time unit) in which the key figure is recorded. In the other columns, you enter values for key figures. Each of these columns represents a time bucket. The period of time that it represents is displayed in the column header. To scroll through the planning horizon, use the scroll buttons in the application toolbar.

48.  Tata consultancy services Split Planning Screen: The split planning screen shows aggregate data in the top half and detailed data in the bottom half.This is seen When disaggregating a product group plan in standard SOP (Disaggregation ® Break down product group plan) whencarrying out level-by-level planning for an information structure whose planning type is defined as dual-level Structure of planning table (cont..)

49.  Tata consultancy services Standard Planning Table The standard planning table is the planning table used in standard SOP. It is made up of six lines containing key figures for: Sales: sales quantities are planned in the sales line. Production : production quantities are planned in the production line. Stock level: The stock level derived from sales and production figures is displayed on this line. One cannot overwrite it. Target stock level: a production plan can be generated from a sales plan in conjunction with the values entered on this line and the selected strategy "target stock level". Days’ supply:The days’ supply is shown on this line. One cannot overwrite it. Target days’ supply: a production plan can be generated from a sales plan in conjunction with the values entered on this line and the selected strategy "target days’ supply". For information on planning functions specific to standard SOP, see: Sales Plans in Standard SOP Sales Plans in Standard SOP: Copying Data from SIS Copying Data from SIS Sales Plans in Standard SOP: Copying Data from CO-PA Copying Data from CO-PA to Standard SOP Production Plans in Standard SOP Creating a Production Plan in Standard SOP Setting an Opening Stock Level Manually in Standard SOP

50.  Tata consultancy services Sales Plans in Standard SOP Various functions are available for creating and modifying sales plans in standard SOP: Manual data entry Arithmetic distribution functions Copying data from SIS Copying data from CO-PA Forecasting sales quantities on the basis of past usage Transferring product group proportions Interactive graphics

51.  Tata consultancy services Production Plans in Standard SOP In a production plan, the quantities needed to produce in order to meet sales plan are planned. The system then calculates stock levels and days’ supply for each period on the basis of the sales and production quantities and any target data. In standard SOP, create a production plan using one of the following: Manual data entry Arithmetic distribution functions

52.  Tata consultancy services Production Plans (cont..) Strategy: production plan synchronous to sales plan : If this strategy is selected, the system copies the sales quantities into the production quantities line. Thus, planned production is exactly the same as planned sales in this planning horizon. Strategy: zero stock level : If this strategy is selected, the system uses any existing stock to cover sales quantities. When this stock has been used up, production quantities are planned in synchronization with sales quantities. Strategy: target stock level :If this strategy is selected, the system calculates the production quantities needed to achieve target stock levels. specify target stock levels on the target stock level line (if desired, using the distribution functions). The system then works out the production quantities on the basis of the sales quantities and target stock levels.

53.  Tata consultancy services Production Plans (cont..) Strategy: target days’ supply:If this strategy is selected, the system calculates the production quantities needed to achieve target days’ supplies. You specify target days’ supplies on the target days’ supply line (if desired, using the distribution functions). The system then works out the production quantities. The days’ supply for a period is the stock level divided by the average requirements (where average requirements = sales/number of workdays, and the number of workdays is given in the factory calendar defined in Customizing).