1. High-Level OP Planning and Demand Management EGS 5622 Enterprise Systems Integration Spring, 2018

2. Enterprise Operations Overview

3. SAP Module View Integrated Solution Client / Server Open Systems
Financial
Accounting
Sales &
Distribution
Materials
Mgmt.
Controlling
Production
Planning
Fixed Assets
Mgmt.
Integrated Solution
Human
Resources
Project
System
Client / Server
Quality
Maintenance
Open Systems
Workflow
Plant
Maintenance
Industry
Solutions
Warehouse
Management

4. Enterprise Structure Credit Control Fiscal Year Area (GL00)
Plants
(DL##/MI##
/SD##)
Client (615)
Chart of
Accounts (GL##)
Company
Code (US##)
Fiscal Year
Variant (K1)
Credit Control
Area (GL00)
Purchasing
Org. (US##)
Group (N##)
Shipping Point (DL##/MI##/SD##)
Distribution
Channel (IN/WH)
Division (BI/AS)
Sales Area
Controlling Area (NA ##)
FG##
SF##
Sales
Org. (UE##/UW##)
Cost centers
RM##
MI##
Work center
(ASSY1000/INSP1000/PACK1000)
TG##

5. SAP GBI Client, Userid, Password
SAP ERP Exercises
Server: CALCUTTA
Client: 615
Application server: warsaw.cob.csuchico.edu
System number:
System ID: CAL
Userid: gbi-002 to gbi-010
Initial password: FLORIDA

6. Check Company Code/Chart Account:
Company code is a central organizational unit used to structure an enterprise from a financial accounting perspective. It is a legally independent entity and the smallest organizational unit for which accounting can be carried out.
Chart of accounts contains the account number, account name, and the information that controls how an account functions and how a General ledger (G/L) account is created in a company code

7. Check company code/Fiscal Year Variant
Fiscal year variant contains the number of posting periods in the fiscal year and the number of special periods

8. Check Control Area
Controlling area is an organizational unit within a company, used for cost account purposes. A controlling area may include single or multiple company codes that may use different currencies.

9. Check Credit Control Area
Credit control area is an organizational unit for specifying and controlling customer credit limits. A credit control area can include one or more company codes.
It is not possible to divide a company code into several credit control areas.

10. Check Plant
Plant is an organizational unit in a company code. Generally, plant is used to describe a production site, a distribution center or centralized warehouse

11. Check Storage Locations
Storage location is an organizational unit allowing the differentiation of material stocks within a plant. It may be a physical or logical unit

12. Check Purchasing Organization
Purchasing organization is an organizational unit within Logistics. A purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transaction.

13. Check Purchasing Group
A purchasing group corresponds to a buyer or group of buyers who perform the following purchasing activities:
1) Procuring certain articles or merchandise categories, and
2) Acting as the contact for vendors.

14. Check Sales Organization
Sales organization is an organizational unit within Logistics. It represents the selling unit in the legal sense and is used to define the basic sales and distribution structure

15. Check Financial Accounts
Financial accounts are used to collect and store business transactions in a way that satisfies external reporting requirements.

16. Check Vendor List
Vendor master database contains information about the vendors that supply an enterprise.

17. Check Customer List
Customer master record is created when a company starts a business relationship with a new customer partner.

18. Material List at Plant DL##
Material master database contains descriptions of all materials that an enterprise procures, produces, and may keep in stock.

19. Check Standard Hierarchy of Cost Center
Standard hierarchy of cost centers is an organizational unit that serves to refine and focus a managerial accounting and reporting sub-system.
Each standard hierarchy is attached to the appropriate Controlling Area

20. Check Sales prices
Sales price is a very sensitive element in business. It determined based on cost, margin (gross, net), distribution channels and so on. .

21. Check Bill of Materials (BOM)
Bill of Materials is a list of all materials required in a process together with the quantities required

22. Check Work Centers
Work center is a location where operations are carried out. It can be machines or machine groups, production lines, assembly work centers, employees or groups of employees.

23. Check Routing
A routing lists all operations (process steps) have to be carried out and in which order to produce. A routing also contains required materials and details about the work centers and the required production resources and tools (includes jigs and fixtures).

24. Lab 10-A: Overview (Due date: 3-7-2018)
List your enterprise structure and components in assigned SAP server and client: such as
- company code, chart account, credit control area,
- plants, storage locations,
- purchasing organization, purchasing group, vendors,
- general ledger accounts,
- sales organizations, distribution channels, sales areas, shipping points, customers,
- stock status at three plants,
- material sales prices,
- bill of materials, work centers, and routings.

25. High-Level OP Planning and Demand Management

26. High-Level OP Planning
ECC 6.0
January 2008
Enterprise Operation Planning
OP Execution
High-Level OP Planning
Procurement
Process
CO/PA
CO/PA – Control Module/Profitability analysis
Detailed OP Planning
Forecasting
Sales and Operations
Planning (SOP)
Demand
Management
MPS
MRP
MPS – Master production Scheduling
MRP – Material Requirement Planning
Execution
Sales Information
System
Manufacturing
Execution
Warehouse
Management
Strategy Planning
Vision
Goals & Objectives
Strategy
Product Portfolio and Roadmap
Sales
Process
© SAP AG and The Rushmore Group, LLC 2008

27. Version 1.0
Planning Strategies
January 2007
Planning strategies represent the business procedures for
Planning of production quantities, and
Time periods
Multiple types of planning strategies based upon environment
Make-To-Stock
Make-To-order
Driven by sales orders
Configurable materials
Mass customization
Assembly orders
Planning strategies represent the business procedures for the planning of production quantities and dates. A wide range of production planning strategies are available in the SAP R/3 System, offering a large number of different options ranging from pure make-to-order production to make-to-stock production. Depending on the strategy you choose, you can:
Use sales orders and/or sales forecast values to create the demand program
Move the stocking level down to the assembly level so that final assembly is triggered by the incoming sales order
Carry out Demand Management specifically for the assembly
The Rushmore Group, LLC

28. Operations Planning & Execution
Version 1.0
January 2007
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
CO – Controlling Module
PA - Profitability analysis
Sales Info
Forecasting
CO/PA
Sales OP Planning (SOP)
Tactical Planning
Demand Management (DM)
Detailed Planning
MPS
MRP/CRP
Manufacturing Execution/SFC
Procurement Process
Order Settlement
Execution
MPS – Master Production Scheduling
MRP – Material Requirement Planning
CRP – Capacity Requirement Planning
SFC – Shop Floor Control
The Rushmore Group, LLC

29. Costing-Based CO-PA
CO-PA is profitability analysis, based on cost- of-sales accounting.
CO-PA can be multiple dimensions, such as product, country, distribution channel, 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.

30. Costing-Based CO-PA
CM: profit margin
CM: Profit margin

31. Pricing and Costing for mfg. goods
Cost components of mfg cost:
Materials Costs
Direct and indirect labor costs
Equipment costs
Strategies to reduce costs
Lean manufacturing
Systems approach

32. Sales and Operations Planning (SOP)
Version 1.0
January 2007
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.
A more recent proposal to fix forecast errors is to use collaboration. The idea is that if different parts of the supply chain collaborate on a common forecast and everyone plans based on that single forecast; then there is little need for one part of the chain to hedge based on the uncertainty of what is done in other parts of the chain. Intra-firm collaboration, you would think, would be common place – seems that a little common sense would dictate that everyone in a firm come together with a common set of forecast figures. But this is rarely the case. Marketing has a set of forecasts, so too does operations. Sales has their forecast and it’s possible that for budgeting purposes Finance uses still another. The advancement of enterprise resource planning (ERP) systems is helping ensure that there is only one forecast, based upon the principles of a single data repository used by all areas of the enterprise.
Forecasts affect most functional areas of the firm and are the starting point for resource allocation decisions. For example, manufacturing must plan production on a day to day basis to meet customer orders, while purchasing needs to know how to align supplier deliveries with the production schedules. Finance needs to understand the forecasts so that the proper levels of investment can be made in plant, equipment, and inventory and so that budgets can be constructed to better manage the business. The marketing function needs to know how to allocate resources for various product groups and marketing campaigns. Forecasts also determine the labor requirements required by the firm so that the human resources function can make proper hiring and training decisions when demand is expected to grow.
The Rushmore Group, LLC

33. Master Data - Product Groups
Version 1.0
January 2007
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 be materials
Bikes
Touring
Mountain
24 Speed
18 Speed
Red 24T
Blue 24T
Red 24M
Blue 24M
Aggregate forecasts of a group of similar products are generally more accurate than individual forecasts of the individual products that make up the group.
The Rushmore Group, LLC

34. Planning Levels Bikes Touring 24 Speed 18 Speed Red 24T Blue 24T
Version 1.0
Planning Levels
January 2007
Bikes
50%
Touring
50% Mountain
70%
24 Speed
30%
18 Speed
Red 24T
Blue 24T
40%
Red 24M
60%
Blue 24M
Planning at Product Group Level
Planning at Material Level
The Rushmore Group, LLC

35. Version 1.0
Demand Management
January 2007
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)
Product Groups
Bikes
50% Mountain
50%
Touring
Disaggregation
Aggregating forecasts across multiple items reduces forecasting errors. A clothing store, for instance, might be able to estimate within a pretty narrow range what the demand will be for men’s dress shirts. But when that store tries to estimate the demand for individual styles, colors, and sizes of shirts, the accuracy of their forecasts will be considerably worse. Firms handle this kind of forecasting problem usually in one of three ways; they either forecast from the bottom up, from the top down, or they start in the middle and work both up and down. The “top down” forecast essentially estimates total sales demand and then divides those sales dollars level by level until the stock keeping unit (SKU) is reached. The “bottom up” method, as one might expect, starts with forecasts at the SKU level and then aggregates those demand estimates level by level to reach a company–level forecast. Another method, one might call the “in-between” method, starts forecasts at the category level (like men’s dress shirts), and then works up to determine store sales and works down to divide up the forecast into styles, colors and SKUs.
30%
18 Speed
70%
24 Speed
50%
18 Speed
50%
24 Speed
40%
Red 24M
60%
Blue 24M
50%
Red 24T
50%
Blue 24T
Material
What is the planned quantity for Bike group if you want to plant 100 of Blue 24T?
The Rushmore Group, LLC

36. Demand Management Forecast Sales Planned Independent Requirements
Version 1.0
Demand Management
January 2007
Forecast
Sales
Planned
Independent
Requirements
Customer
Independent
Requirements
Demand
Program
MPS / MRP
The Rushmore Group, LLC

37. Transfer from High Level to Detailed Planning
Version 1.0
January 2007
Transfer from High Level to Detailed Planning
Bikes
50%
Touring
50% Mountain
70%
24 Speed
30%
18 Speed
Red 24T
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
The Rushmore Group, LLC

38. Enterprise Strategic Planning SAP Implementation

39. Product Group (T-code: MC85)

40. Work Center (T-code: CR03)

42. Work Center Costing

43. Labor rate: $50/hour

44. Create Finished Material

46. Forecast : Parameters Set up
Version 1.0
January 2007
Forecast : Parameters Set up
January 2007 (v1.0)
© 2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore Group, LLC
The Rushmore Group, LLC

47. Forecast : Historical Data
Version 1.0
January 2007
Forecast : Historical Data
The Rushmore Group, LLC

48. Sales and Operations Planning (SOP)
Version 1.0
January 2007
Sales and Operations Planning (SOP)
Flexible forecasting and planning tool
Usually consists of three steps:
Generate SOP from forecast, CO/PA plan, SIS plan, …
Generate Production Plan
Generate Rough Cut Capacity Plan
Planned at an aggregate level in time buckets (Days, Weeks, Months)
The Rushmore Group, LLC

49. Generate SOP (T – MC82) Version 1.0 January 2007
The Rushmore Group, LLC

50. Selecting a Model:
-Auto. Model selection

52. MAD: median absolute deviation

53. Forecast Example: Trend-Seasonal Forecast

54. An Example of SOP

55. Transfer SOP to Demand Management
Version 1.0
January 2007
Transfer SOP to Demand Management
(T – MC82)
The Rushmore Group, LLC

56. An Example of Demand Management
Version 1.0
January 2007
An Example of Demand Management
The Rushmore Group, LLC

57. Run MPS with MRP (T-code: MD40)
Version 1.0
January 2007
Run MPS with MRP (T-code: MD40)
The Rushmore Group, LLC

58. Review Stock/Requirement List
(T-code: MD04)

59. Transfer from High Level to Detailed Planning

60. Lab 10-B: (Due date: 3-7-2018) Display Product group
Review work center and assigned capacity
Create consumption values (forecast) for finished products
Create sales and operations plan (SOP)
Check stock/requirements list
Transfer SOP to demand management
Review demand management
Run MPS with MRP
Review stock/requirement list