1. High-Level OP Planning and Demand Management EGN 5622 Enterprise Systems Integration Spring, 2013 High-Level OP Planning and Demand Management EGN 5622 Enterprise Systems Integration Spring, 2013

2. Production Planning & Execution January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC2 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

3. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.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 January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC4 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

6. 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 January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC8

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 January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC9 Bikes TouringMountain 24 Speed18 Speed 24 Speed Red 24TBlue 24TRed 24MBlue 24M

10. Planning Levels January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC10 Bikes 55% Touring 45% Mountain 70% 24 Speed 30% 18 Speed 40% 18 Speed 60% 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) January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC11 Bikes 55% Touring 45% Mountain 70% 24 Speed 30% 18 Speed 40% 18 Speed 60% 24 Speed 50% Red 24T 50% Blue 24T 40% Red 24M 60% Blue 24M Disaggregation Product Groups Material

12. Demand Management January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC12 Planned Independent Requirements Customer Independent Requirements SalesForecast Demand Program MPS / MRP

13. Transfer from High Level to Detailed Planning January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC13 Bikes 55% Touring 45% Mountain 70% 24 Speed 30% 18 Speed 40% 18 Speed 60% 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. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.14 Creation of The Demand Program Start with sales operation plan (SOP) after forecast input Convert SOP into (rough cut) production plan, which consists of the following data elements. ◦Time Buckets ◦Sales ◦Production ◦Stock levels ◦Days supply Translate production plan into demand program, via disaggregation

15. Enterprise Strategic Planning SAP Implementation EGN 5622 Enterprise Systems Integration Spring, 2013 Enterprise Strategic Planning SAP Implementation EGN 5622 Enterprise Systems Integration Spring, 2013

16. Planning Strategies Planning strategies represent the business procedures for ◦The planning of production quantities ◦Dates SAP offers a range of PP strategies ◦From those for MTS ◦To those for MTO January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC16

17. Planning Strategies Multiple types of planning strategies based upon environment –Make-To-Stock (MTS) –Make-To-order (MTO) 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, LLC17

18. Planning Strategy for Make-to-Stock Planning Strategy for Make-to-Stock Planning takes place using Independent Requirements ◦Sales are covered by make-to-stock inventory Strategies ◦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, LLC18

19. Planning Strategy for Make-to-Order Planning Strategy for Make-to-Order Planning takes place using Customer Orders ◦Sales are covered by make-to-order production Strategies ◦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, LLC19

20. Forecasting set up in SAP 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, LLC20

21. 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 January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC21

22. Statistics Graphics January 2007 (v1.0) © 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC22

23. Exercises: (Due date: 1/28/2013) 1. Review material status for finished products 2. Review bill of materials for executive pen set 3. Display multi-level bill of materials for ESET 4. Review routing for assembly EPEN 5. Review routing/BOM in the engineering workbench 6. Review work center and assigned capacity 7. Create consumption values for finished products 8. Create material master for finished products 9. Create bill of material 10. Create finished products routing 11. Create material master for product group 12. Assign members for production group 13. Create sales and operations plan 14. Transfer SOP to demand management 15. Review demand management 16. Run MPS with MRP 17. Review stock/requirement list