1. High-Level OP Planning and Demand Management EGN 5622 Enterprise Systems Integration Fall, 2015 High-Level OP Planning and Demand Management EGN 5622 Enterprise Systems Integration Fall, 2015

2. Production Planning & Execution 2 Demand Management Forecasting Sales & Operations Planning Sales Inf. System CO/PA MPS MRP/CRP Manufacturing Execution/SFC Order Settlement Procurement Process Tactical Planning Detailed Planning Manufacturing Execution SFC – Shop Floor Control

3. 3 High-Level OP Planning Planning activities: 1.CO/PA 2.Forecasting 3.Sales and Operations Planning ◦ Planning strategy for a product 4.Demand Management Demand management feeds to MPS and in turn MRP/CRP

4. Operations Planning & Execution Major Players: ◦Tactical Planning (at corporate level)  COO, CFO, Controller, Sales & Marketing, Product Line mangers, Production Planner ◦Detailed Planning (at plant level)  Production Planner/Scheduler, MRP Controller, Capacity Planners ◦Execution (at shop floor level)  Production Line Workers, Shop Floor Supervisors, Buyers 4 Demand Management Forecasting Sales OP Planning Sales Info CO/PA MPS MRP/CRP Manufacturing Execution/SFC Order Settlement Procurement Process Tactical Planning Detailed Planning Execution

5. Costing-Based CO-PA CM: Profit margin

6. Costing-Based CO-PA CO-PA is profitability analysis, based on cost- of-sales accounting. CO-PA can be viewed as a cube of 3 dimensions (representing product, country, and customer) CO-PA data are collected from various areas, such as ◦sales orders or billing data from SD, ◦production costs and variance from PP, and ◦values of overhead cost controlling from controlling.

7. Pricing and Costing for mfg. goods Cost components ◦Materials Costs ◦Labor costs ◦Equipment costs Strategies to reduce costs ◦Lean manufacturing ◦Systems approach

8. Sales and Operations Planning (SOP) Information Origination ◦Sales ◦Marketing ◦Manufacturing ◦Accounting ◦Human Resources ◦Purchasing Intra-firm Collaboration ◦Institutional Common Sense ◦ ERP systems ensure that there is only one forecast, based upon the principles of a single data repository used by all areas of the enterprise. 8

9. Master Data - Product Groups Aggregate planning that group together materials or other product groups (Product Families) Multi- or Single- Level Product Groups ◦the lowest level must always consist of materials 9 Bikes TouringMountain 24 Speed18 Speed 24 Speed Red 24TBlue 24TRed 24MBlue 24M

10. Planning Levels 10 Bikes 50% Touring 50% Mountain 70% 24 Speed 30% 18 Speed 50% 18 Speed 50% 24 Speed 50% Red 24T 50% Blue 24T 40% Red 24M 60% Blue 24M Planning at Product Group Level Planning at Material Level

11. Demand Management Link between Strategic Planning (SOP) & Detailed Planning (MPS/MRP) The results of Demand Mgmt is called the Demand Program, it is generated from our independent requirements – PIR (Planned IR) and CIR (Customer IR) 11 Bikes 50% Touring 50% Mountain 70% 24 Speed 30% 18 Speed 50% 18 Speed 50% 24 Speed 50% Red 24T 50% Blue 24T 40% Red 24M 60% Blue 24M Disaggregation Product Groups Material What is the planned quantity for Bike group if you want to plant 100 of Blue 24T?

12. Demand Management 12 Planned Independent Requirements Customer Independent Requirements SalesForecast Demand Program MPS / MRP

13. Transfer from High Level to Detailed Planning 13 Bikes 50% Touring 50% Mountain 70% 24 Speed 30% 18 Speed 50% 18 Speed 50% 24 Speed 50% Red 24T 50% Blue 24T 40% Red 24M 60% Blue 24M Demand Planning Data Planning at Material Level Disaggregation Planned Independent Requirements At Material and Plant Level Transfer Operative Planning Data Planning at Group Level

14. Enterprise Strategic Planning SAP Implementation Enterprise Strategic Planning SAP Implementation

15. Planning Strategies Planning strategies represent the business procedures for ◦Planning of production quantities, and ◦Time periods SAP offers a range of PP strategies ◦From those for MTS (Make-to-stock) ◦To those for MTO (Make-to-order) January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC15

16. Planning Strategies Multiple types of planning strategies based upon environment –Make-To-Stock –Make-To-order Driven by sales orders –Configurable materials Mass customization of one –Assembly orders January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC16

17. Planning Strategy for Make-to- Stock Planning takes place using Independent Requirements MTS Strategy Types in SAP ◦10 – Net Requirements Planning ◦11 – Gross Requirements Planning ◦30 – Production by Lot Size ◦40 – Planning with Final Assembly January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC17

18. Planning Strategy for Make-to- Order Planning takes place using Customer Orders ◦Sales are covered by make-to-order production MTO Strategy Types in SAP ◦20 – Make to Order Production ◦50 – Planning without Final Assembly ◦60 – Planning with Planning Material January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC18

19. Forecast : Historical Data January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC19

20. Forecast : Parameters Set up January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC20

21. Forecast: Models Forecasting Models ◦Trend ◦Seasonal ◦Trend and Seasonal ◦Constant Selecting a Model ◦Automatically ◦Manually January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC21

22. Forecast Example: Trend-Seasonal Forecast January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC22

23. Sales and Operations Planning (SOP) Flexible forecasting and planning tool Usually consists of three steps: ◦Sales Plan ◦Production Plan ◦Rough Cut Capacity Plan Planned at an aggregate level in time buckets 23

24. Transfer SOP to Demand Management January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC24

25. Demand Management January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC25

26. Transfer from High Level to Detailed Planning January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC26

27. Lab 1: (Due date: 9/26/2015) 1. Display Product group 2. Review work center and assigned capacity 3. Create consumption values (forecast) for finished products 4. Create sales and operations plan (SOP) 5. Check stock/requirements list 6. Transfer SOP to demand management 7. Review demand management 8. Check stock/requirements list 9. Run MPS with MRP 10. Review stock/requirement list