Introduction to Supply Chain

What is Supply Chain?

- Catering to the DEMAND of the customers.
- DEMAND could be the Finished Goods (FGs), or services etc.
- DEMAND triggers many things, such as, Production, Management of Raw Materials, Flow of
Information and Flow of Cash.

What is Supply Chain Management?

Increase in Customer responsiveness at LEAST cost.

Coordination and integration with various stake holders in the Supply Chain is necessary for –

- Lower sourcing costs for FGs and Raw Materials.

- Improved customer responsiveness.
- Lower levels of Inventory.
- Resource Optimization.
Type of Industries
 Agri Industry (fertilizers etc)
 CPG Industry (Off the Shelf products)
 Hi-Tech Industry (Electronics)
 Manufacturing Industry
 Metal Working Industry
 Oil Industry
 Auto Industry

Production Strategies
Every industry use the below production strategies –

 Make to Order (MTO)

 Make to Stock (MTS)
 Postponement Strategy

Off-the-shelf products, like any CPG product – soap, toothpaste etc, which have long shelf life are
produced by following the MTS strategy, also called as PUSH strategy.

The products which have less shelf life are produced using MTO strategy, also known as PULL strategy.

When we decouple MTS and MTO strategies, it is known as POSTPONEMENT strategy.

For e.g., Laptops are available with various configurations, but the Base Model is the same for them
Base Model may include – Key Board, Mouse, Plastic Body, basic hard ware. And when we customize the
laptop, the Customizable Components may include – processor, hard disk, RAM, graphics card etc.

The Base Model components can be made available in the plants using MTS strategy. But, whenever a
Sales Order is generated, only then the Customized Components can be planned to be made available
using MTO strategy. Then the plant assembles the laptop and ships it to the customer. This de-coupling
of the MTS and MTO strategy is known as POSTPONEMENT strategy.
Supply Chain Problems
The key supply chain problem is that the delivery time of products to the customer
must be considerably shorter than the production or the lead time. In order to realize
this and to guarantee a high delivery service, inventory and safety stock must be built
up at component or finished product level in plants or distribution centers (DC).

You use postponement strategies to define how far the sales order links with the
supply chain; in other words, where the decoupling of make-to-stock production (push
strategies) (MTS), and make to- order production (pull strategies) (MTO), takes place.

The bullwhip effect refers to an increase in variability of a (constant) demand pattern -

due to large fluctuations at the manufacturer or the supplier - as we move along the
supply chain, triggered by lot size creation.
 SAP’s Total Supply Chain Solution

R/3 – is the execution system, where the sales order, purchase orders, invoicing etc actually takes place.

But, Execution at such a mass level can’t be done without proper Planning.

Hence, we use the SAP provided Planning solution Advanced Planner and Optimizer (APO).

APO is a utility provided by SAP SCM 4.0 and above versions.

SAP – Big Picture

SAP has segregated the EXECUTION, PLANNING and REPORTING of any Business.

This is done to reduce the load on the execution system, keep the execution system data un-harmed,
and improve performance.

Hence, Planning is done in SAP SCM system. And Reporting is done in SAP Business Intelligence system.
Key Components of SAP APO
APO Interaction with other systems

Planning with APO and R/3

APO DP – High Level Overview
Demand Planning
APO Demand Planning Process Overview
APO Demand Planning – Example
(How does a Planning Book look?)
APO DP Facts -
APO DP – Key Considerations
Important Questions for SAP APO Project
7 Key Points to Take Home
 Supply Chain Management is basically improving the Customer responsiveness by incurring
minimum cost, and optimizing the use of resources.
 Various types of industries and their production strategies
 SAP Big Picture with – Execution , Planning and Reporting systems
 Key Components of APO – DP, SNP, PP/DS, TP/VS, GATP
 APO Demand Planning process overview
 APO Demand Planning Facts
 APO Demand Planning Key Considerations

SAP APO Demand Planning Training Details

Topics Content Date Time

Demo Session Supply Chain and SAP APO Overview September 10th 8:30 a.m.
     
BI Data Sources, InfoObjects, InfoProviders TBD TBD
BI Data Staging and Loading TBD TBD
     
Storage Bucket Profile, Planning Area,
Basic DP Master Planning Object Structure TBD TBD
CVCs, Planning Book, Data Views, Forecast
Basic DP Profiles TBD TBD
   Recap of Basic DP TBD TBD

Advanced DP Macros, Promotion Planning TBD TBD

Advanced DP Life Cycle Planning, Realignment TBD TBD
Advanced DP Mass Processing, Process Chains TBD TBD
   
Complete DP
Cycle Recap of all the topics TBD TBD