Demand Planning with SAP APO – Concepts and Design

2.1 SAP Supply Chain Management

The SAP SCM solution is an umbrella solution that primarily includes planning, as well as execution activities. SAP SCM seamlessly integrates with other major solutions and applications, e.g., SAP BI, SAP ERP, and non-SAP systems as shown in Figure 2.1.

In this section, we will review the different SAP SCM components and provide a brief explanation of each.

Advanced Planning and Optimization (APO)

APO is the advanced planning and optimization solution component in SAP SCM. We review it in detail in Section 2.2.

Supplier Network Collaboration (SNC)

SNC is an SAP SCM component that facilitates collaboration with internal and external partners in the supply network. With SNC, we can collaborate with suppliers, customers, and contract manufacturers. From a system integration perspective, SNC establishes seamless integration with SAP ERP, i.e., SAP core execution system through SAP Process Integration (PI) technology. Collaboration primarily uses web technology and warrants minimal investments from partners (i.e., only a web browser).

Collaboration with suppliers includes: purchase orders, advanced shipping notifications, invoices, incoming shipments, release processing, Kanban, supplier managed inventories, replenishments, forecasts, etc.

Collaboration with customers includes: vendor managed inventories, forecasts, promotions, replenishments, and advanced shipping notifications.

Collaboration with contract manufacturers includes: procurement, work orders, sub-contracting purchase orders, advanced shipping notifications, invoices, incoming shipments, supply network, and inventories.

Extended Warehouse Management (EWM)

EWM facilitates flexible, automated, and optimized warehouse management support for multiple goods movement and inventory management activities for warehouses. EWM is particularly suitable for companies that have high volume goods movements, process-oriented storage control, complex warehousing activities, and complex goods movement networks. EWM increases warehouse management productivity and offers centralized warehouse monitoring.

EWM is primarily an execution-oriented module and includes planning activities as well. EWM seamlessly integrates with other logistics and fulfilment processes like transportation management, logistics execution, global trade management, global available to promise checks, and event management.

EWM carries out warehouse management activities for inbound processes, outbound processes, storage and operational processes. EWM also offers cross-functional warehousing activities such as resource and labor management, cross docking, yard management, material flow system, etc.

Event Management (EM)

EM facilitates visibility on processes, assets, and performances across the entire supply network through monitoring, notification, adjustment, collaboration, and analysis of business events.

EM is able to integrate and communicate across multiple technologies, architectures, and platforms and is in a position to provide seamless visibility for the entire business network for both supply chain planning and supply chain execution.

Forecasting & Replenishment (F&R)

F&R is the SAP Forecasting and Replenishment solution in the SCM space. F&R executes forecasting on a near real-time basis with the objective of maintaining an optimum inventory across distribution centers and retail stores across the entire supply network. This is coupled with automated multilevel replenishment planning and ordering capabilities of the goods to increase productivity, decrease order fulfilment costs, and increase service levels.

Figure 2.1: SAP SCM components and interfaces

All of the components explained above and shown in Figure 2.1 often interact with one another depending on the business requirements. Furthermore, the entire SAP SCM system integrates with the SAP ERP execution system, big time, for master and transactional data. SAP SCM also integrates with other SAP systems like SAP BW, SAP CRM, SAP SRM, and SAP PI depending on the business need. SAP SCM can also integrate with web applications, as well as non-SAP systems.