Description
Supply Chain Management and Advanced Planning Systems
H. H.--O. Günther O. Günther
Dept of Production Management Dept of Production Management Dept. of Production Management Dept. of Production Management
Technical University of Berlin Technical University of Berlin
Supply Chain Management and Supply Chain Management and
Advanced Planning Systems Advanced Planning Systems Advanced Planning Systems Advanced Planning Systems
A Tutorial A Tutorial
SCM Workshop, TU Berlin, October 17-18, 2005
Outline Outline
Introduction: The concept of SCM and APS Introduction: The concept of SCM and APS
APS modules APS modules
Strategic Network Design
Demand
Pl i
Supply Network Planning
Planning
External
Production
Planning /
Transportation
Planning /
Order
Fulfilment
Procurement Detailed
Scheduling
Vehicle
Scheduling
Fulfilment
ATP / CTP
Lesson 1
There is an ongoing g g
change of paradigm
from ERP / MRP
towards APS.
Generations of PPC software Generations of PPC software
1960s
•Predecessors of PPC systems
Focus on inventory control
1970s
Focus on inventory control
Basic order processing
•Material requirements planning (MRP) q p g ( )
Bill of material files
Calculation of net requirements
1980s
•Manufacturing resources planning (MRP II)
Enhanced planning functions
Integration of financial accounting and management functions
1990s
g g g
•Integrated systems
CIM: Integration of manufacturing
2000s
ERP systems covering the whole enterprise
•Advanced Planning and Scheduling systems
Integration into Supply chain management concept
Use of true optimization techniques
Lesson 2
SCM d SCM needs
sophisticated
l i t planning systems.
Change of view
Plant specific view
Holistic view
More efficient network More efficient network--wide planning needed wide planning needed More efficient network More efficient network wide planning needed wide planning needed
Development of APS Development of APS
Supply chain management
Definition
Demand element
(customer order or forecast)
“A supply chain
consists of all parties
Customers,
distribution centres
Transportation order
consists of all parties
involved, directly or
indirectly, in fulfilling
Transporters
a customer request….
the supply chain
Manufacturing
Production order
… the supply chain
includes all functions
involved in receiving
Manufacturing
stages
Replenishment order
and filling a customer
request.”
Tiers of
suppliers
(Chopra and Meindl, 2004)
Types of supply chains (networks)
Inter Inter--company company
s ppl chains s ppl chains supply chains supply chains
Internal supply Internal supply
h i h i chains chains
Lesson 3
APS employ hierarchical APS employ hierarchical
planning, consider the
availability of resources, availability of resources,
and apply optimization.
Characteristics of Advanced Planning
Analysis of the Analysis of the
decision problem decision problem
Procurement Procurement Sales Sales Production Production Distribution Distribution
decision problem decision problem
Definition of the Definition of the
objectives objectives
Integral planning of the entire supply chain Integral planning of the entire supply chain
True optimization True optimization
Forecasting future Forecasting future
developments developments
Feasible Feasible
alternatives alternatives
e.g. APS from SAP, i2 technologies, e.g. APS from SAP, i2 technologies,
Hierarchical planning Hierarchical planning
Selection of Selection of
solution solution
e.g. APS from SAP, i2 technologies, e.g. APS from SAP, i2 technologies,
Manugistics, Oracle, Aspen Tech Manugistics, Oracle, Aspen Tech
(Fleischmann et al. 2002)
solution solution
Architecture of Advanced Planning Systems
Procurement Production Distribution Sales
Strategic Network Design
long-term
Demand
Planning
Supply Network Planning mid-term
Production Transportation
External
Procurement
Planning /
Detailed
Scheduling
Planning /
Vehicle
Scheduling
short-term
Order
Fulfilment
ATP / CTP
Companies rarely use the entire suite of modules.
Even APS from different software vendors are used in a company.
Various industry specific solutions offered
Classical MRP systems
P
Customer
orders
M1 S
Material
requirements
M2 C
q
Capacity
M3
requirements
A2
Routing
Scheduling A1
A3
A4
Lesson 4
F t BOM Forget BOMs
and routings.
L PPM Learn PPM.
Production-process-model
Operation:
Product P
Operation:
Component C
Operation:
Sub-assembly S
P
Product P
mat. M1
res. c
Component C Sub assembly S
P
M1 S
act. P2
res d
act. P1
act. P3
res. e
res f
act. C1
mat. M3
res a
act. S1
mat. M2
comp C
M1
M2
S
C
res. d
sub-a. S
res. f res. a comp. C
res. b
M3
C
M3
C
P
M1 S M2
S
C M1 S M2 C
Assign resources and materials to each activity Assign resources and materials to each activity.
Alternative modes (resources, routings) can be defined for an activity.
APS planning cycle
Strategic network design
Demand planning
Supply network planning
Production planning /
detailed scheduling
Transportation planning /
vehicle scheduling
Order fulfilment
and ATP / CTP
External
procurement procurement
TheAPS planning cycle represents the logical order of planning tasks The APS planning cycle represents the logical order of planning tasks.
Planning tasks differ by the frequency by which they are called up.
Outline Outline
Introduction: The concept of SCM and APS Introduction: The concept of SCM and APS
APS modules APS modules
St t i t k d i Strategic network design
Supply network planning
Demand planning
External procurement External procurement
Production Planning / Detailed Scheduling
T t ti Pl i / V hi l S h d li Transportation Planning / Vehicle Scheduling
Order Fulfilment and ATP / CTP
Lesson 5
St t i t k d i i Strategic network design is
a powerful, but the least
tili d d l f APS utilized module of APS.
Strategic network design Strategic network design
Strategic Network Design
Decisions
Number of plants and DCs
Locations and capacities
Assignment of locations to each other
Assignment of products to plants
Locations and capacities
Determination of transportation links
Assignment of locations to each other
e.g. customers to DCs
Mathematical methods
He ristics MILP Cl stering techniq es
Determination of transportation links
Heuristics, MILP, Clustering techniques
Strategic network design
Planning frequency
low
high
Planning frequency
Planning horizon
long
short
D f ti
high
low
Degree of aggregation
Management level
high
low
Strategic network design
Exercise: Modelling Nutricia’s supply network design
by use of SAP APO 3 1 (based on Wouda et al 2003) by use of SAP APO 3.1 (based on Wouda et al., 2003)
SSSupplier
Plant
Customer
Supplier
Plant
Customer
Distribution
centre
Distribution
centre
Lesson 6
Forecasting is essential at Forecasting is essential at
all planning levels. Pure
forecasts can cause ampli- forecasts can cause ampli
fication of demand.
Demand planning
Use of forecast
Strategic level: design of the supply network
Demand
Planning
Operational level: production, distribution,
and procurement decisions
Short-term: update of production orders
and procurement decisions
Demand planning
Most essential in make-to-stock environment,
Collaborative forecasting between partners in the supply chain
e.g. in the consumer goods industry
Mathematical methods
Statistical forecasting techniques
Tools for incorporating human judgement
Lesson 7
Supply network planning Supply network planning
is a core module of SCM.
Huge cost savings Huge cost savings
can be gained.
Supply network planning
Mathematical methods
LP and MILP heuristics
Supply Network Planning
LP and MILP, heuristics
pp y g
Decisions Decisions
Allocation of production quantities between plants
Supply fromthe plants to DCs and fromthe DCs to customers
Smoothing out seasonal cycles in demand
Supply from the plants to DCs and from the DCs to customers
Consideration of production, transportation, and handling capacities
as hard constraints
Consideration of demand d e dates and safet stocks Consideration of demand, due dates, and safety stocks
as soft constraints
Supply network planning
Planning frequency
year
day
Planning frequency
Planning horizon
year
day
D f ti
high
low
Degree of aggregation
Management level
high
low
Supply network planning
Supply chain engineer in SAP APO 3.1
S t f th t k fi ti Set-up of the network configuration
Integration of suppliers and transporters
Assign and modify master data, e.g. product portfolio and capacities,
costs, safety stocks, demand figures, modes of transportation etc
Lesson 8
Generic model formulations
show pros and cons.
Supply network planning
Generic model formulation
Production capacity at plants
Storage and handling capacity at DCs
? ?
? ?
? ?
) ( ) ( i P p
it pijt pi
i J j
PC x a
?
?
? ?
) (i P p
j pjt p
SC y ?
p y p
Storage and handling capacity at DCs
? ? ? ?
? ? ? ?
? ? + ?
) ( ) ( ) ( ) ( i P p
j
k i P p
pjkt p
j K
pijt p
j I i
HC z x ? ?
Storage and handling costs per DC
?
? ?
ijt ijt
TC x ?
? ? ? ? ? ? ?
? + ?
pjkt pjk pjt p
z c y h
Transportation capacity per link
Storage and handling costs per DC
?
?
?
) (i P p
ijt pijt p
TC x ?
? ? ? ? ? ? ?
? ? ? ? ? ? ? P p J j
pjkt
T t
pjk
) j ( K k P p J j
pjt
T t
p
y
Aggregate demand per DC
? ? ? ?
? ? ? ?
?
) ( ) ( i P p I i
pijt
T t
pij
i J j
x c
?
?
=
) (k J j
pkt pjkt
b z
Production costs per plants
Aggregate demand per DC
Assigning attributes to pre-defined entities
Supply network planning
Planning books offer user-defined views of the solution
Safety stock planning
Additional features of SAP APO 3.1
Safety stock planning
Lot-sizing and production campaign planning
Lesson 9
PP/DS is the module PP/DS is the module
most difficult to adapt to the
application-specific application specific
features.
Production Planning / Detailed Scheduling
Decisions
Generation of production orders
Mathematical methods
Genetic algorithms Generation of production orders
Allocation of resources according
to a finite scheduling policy
Genetic algorithms
Constraint programming
Rules and heuristics
to a finite scheduling policy
Application specific
algorithms
Production
Planning /
Detailed
S h d li Scheduling
Lot-sizing, sequencing, and procurement proposals
Consideration of the availability of resources as hard constraints Consideration of the availability of resources as hard constraints
Consideration of due dates, time windows etc. as soft constraints
Production Planning / Detailed Scheduling
Planning frequency
year
day
Planning frequency
Planning horizon
year
day
D f ti
high
low
Degree of aggregation
Management level
high
low
Production Planning / Detailed Scheduling
Case study: Production of hair dyes
Box
Final Product
Dye Cream
CreamLiquid
Dispersion
Dispersion
Li id
Shampoo
Shampoo
Li id
Tube
Cream
Chemicals
Cream Liquid
Bottle
Dispersion
Chemicals
Liquid
Tube
Shampoo
Chemicals
Liquid
Processing line
cream
Filling shampoo
Processing line
dispersion
Filling cream and dispersion
and packaging final product
Processing line
shampoo
Lesson 10
Most scheduling problems Most scheduling problems
are NP-hard.
However, practical solutions However, practical solutions
are often easy to obtain.
Production Planning / Detailed Scheduling
Case study: Production of hair dyes
S l ti bt i d f th PP/DS d l f SAP APO 3 1 Solutions obtained from the PP/DS module of SAP APO 3.1
within 2 minutes
GA i t CP GA superior to CP
Alternative solvers can be
i t t d i “O ti i ti integrated via “Optimization
extended workbench”
Additional features
of SAP APO 3.1
Characteristics based planning
Shelf-life consideration
Model mix planning
Production Planning / Detailed Scheduling
Complete pegging (dynamic or fixed)
-10
Customer orders
10 20 40 10 60
20 10 40 50 10
Deficit
30 100 T t ti d
30 20 50 30
Surplus
30 100 Transportation orders
+20
Surplus
50 50 50
Production orders
50 30 20 50
Surplus
+10
80 80
Purchase orders
Lesson 11
Procurement requires a Procurement requires a
high degree of collaboration
between partners in the between partners in the
supply chain.
External procurement
Decisions
Determination of the purchase quantity
Selection of the supplier
Mathematical methods
Rule-based and heuristic
d procedures
MILP
External
Procurement
In-house or external supply?
Release of deliveries for J IT goods Release of deliveries for J IT goods
Lesson 12
ATP / CTP provide simple,
but very effective tools. y
Order fulfilment and ATP / CTP
Decisions
Matching customer orders
against available quantities
Quick response to customer requests
Capacity check for newor enhanced
Quick response to customer requests
(Available to Promise: ATP)
Capacity check for new or enhanced
production orders in response to
customer requests
(C bl t P i CTP)
Order
(Capable to Promise: CTP) Fulfilment
ATP / CTP
Mathematical methods
Rule-based ATP
Batch mode ATP (MILP)
Order fulfilment and ATP / CTP
Rule-based ATP: Bayer AG, Germany
Query from customer EXC1, for
product P1, amount Q1, date T1
Preliminary quick check with
availability chart for P1, T1
Commit order for
EXC1, P1, Q1, T1
Query for commitment
from inventory for
EXC1, P1, Q1, T1
Yes
Earliest date available for P1, 1? T2
No
EXC1 satisfied?
Commit order for EXC1, P1, Q1, T2
using query for commitment from
inventory
Yes
No
Query for commitment
from inventory or
production for EXC1,
P1, Q1, T1
Commit order for EXC1, P1, Q1, T1;
create campaign(s) for production
Yes
, Q ,
Place order for EXC1, P1, Q1, T1;
commitment after optimization run if
capable to produce
No
Order fulfilment and ATP / CTP
ATP decision cube of SAP APO 3.1
Customer order /
end item
Same product/
alternative location
Original
d
Alternative product/
alternative location
Alternative
order
Production
product
Change of location
Production
Change of location
Alternative component
Lesson 13
Customer satisfaction
finally depends on the
timely execution of y
transportation activities.
Transportation planning and vehicle scheduling
Decisions
Choice of the transportation mode (e g truck or rail) Choice of the transportation mode (e.g. truck or rail)
Integration of external logistics service providers
and offering of own logistics services (e.g. VMI)
Determination of regular freight
frequencies between locations and
of the unit transportation size of the unit transportation size
Transportation
Planning /
Vehicle
Vehicle loading and scheduling
considering time windows for delivery
Scheduling
g y
Collaboration between locations and
with external logistics service providers
Mathematical methods
Heuristics Heuristics
Local Search
Concluding remarks
Huge cost savings can be gained through efficient use of APS.
APS have been adopted in many industries.
Collaboration between partners in the supply chain including Collaboration between partners in the supply chain including
share of information and transparency of business processes
is seen as a major driver of SCM performance.
No global “optimize SCM” button provided by APS.
Expertise needed.
Optimization models often require large computational effort.
APS, especially at the detailed scheduling level, do not
sufficiently consider application specific features.
APS are most successful for intra company supply chains APS are most successful for intra-company supply chains
with centralized logistics control.
doc_351583443.pdf
Supply Chain Management and Advanced Planning Systems
H. H.--O. Günther O. Günther
Dept of Production Management Dept of Production Management Dept. of Production Management Dept. of Production Management
Technical University of Berlin Technical University of Berlin
Supply Chain Management and Supply Chain Management and
Advanced Planning Systems Advanced Planning Systems Advanced Planning Systems Advanced Planning Systems
A Tutorial A Tutorial
SCM Workshop, TU Berlin, October 17-18, 2005
Outline Outline
Introduction: The concept of SCM and APS Introduction: The concept of SCM and APS
APS modules APS modules
Strategic Network Design
Demand
Pl i
Supply Network Planning
Planning
External
Production
Planning /
Transportation
Planning /
Order
Fulfilment
Procurement Detailed
Scheduling
Vehicle
Scheduling
Fulfilment
ATP / CTP
Lesson 1
There is an ongoing g g
change of paradigm
from ERP / MRP
towards APS.
Generations of PPC software Generations of PPC software
1960s
•Predecessors of PPC systems
Focus on inventory control
1970s
Focus on inventory control
Basic order processing
•Material requirements planning (MRP) q p g ( )
Bill of material files
Calculation of net requirements
1980s
•Manufacturing resources planning (MRP II)
Enhanced planning functions
Integration of financial accounting and management functions
1990s
g g g
•Integrated systems
CIM: Integration of manufacturing
2000s
ERP systems covering the whole enterprise
•Advanced Planning and Scheduling systems
Integration into Supply chain management concept
Use of true optimization techniques
Lesson 2
SCM d SCM needs
sophisticated
l i t planning systems.
Change of view
Plant specific view
Holistic view
More efficient network More efficient network--wide planning needed wide planning needed More efficient network More efficient network wide planning needed wide planning needed
Development of APS Development of APS
Supply chain management
Definition
Demand element
(customer order or forecast)
“A supply chain
consists of all parties
Customers,
distribution centres
Transportation order
consists of all parties
involved, directly or
indirectly, in fulfilling
Transporters
a customer request….
the supply chain
Manufacturing
Production order
… the supply chain
includes all functions
involved in receiving
Manufacturing
stages
Replenishment order
and filling a customer
request.”
Tiers of
suppliers
(Chopra and Meindl, 2004)
Types of supply chains (networks)
Inter Inter--company company
s ppl chains s ppl chains supply chains supply chains
Internal supply Internal supply
h i h i chains chains
Lesson 3
APS employ hierarchical APS employ hierarchical
planning, consider the
availability of resources, availability of resources,
and apply optimization.
Characteristics of Advanced Planning
Analysis of the Analysis of the
decision problem decision problem
Procurement Procurement Sales Sales Production Production Distribution Distribution
decision problem decision problem
Definition of the Definition of the
objectives objectives
Integral planning of the entire supply chain Integral planning of the entire supply chain
True optimization True optimization
Forecasting future Forecasting future
developments developments
Feasible Feasible
alternatives alternatives
e.g. APS from SAP, i2 technologies, e.g. APS from SAP, i2 technologies,
Hierarchical planning Hierarchical planning
Selection of Selection of
solution solution
e.g. APS from SAP, i2 technologies, e.g. APS from SAP, i2 technologies,
Manugistics, Oracle, Aspen Tech Manugistics, Oracle, Aspen Tech
(Fleischmann et al. 2002)
solution solution
Architecture of Advanced Planning Systems
Procurement Production Distribution Sales
Strategic Network Design
long-term
Demand
Planning
Supply Network Planning mid-term
Production Transportation
External
Procurement
Planning /
Detailed
Scheduling
Planning /
Vehicle
Scheduling
short-term
Order
Fulfilment
ATP / CTP
Companies rarely use the entire suite of modules.
Even APS from different software vendors are used in a company.
Various industry specific solutions offered
Classical MRP systems
P
Customer
orders
M1 S
Material
requirements
M2 C
q
Capacity
M3
requirements
A2
Routing
Scheduling A1
A3
A4
Lesson 4
F t BOM Forget BOMs
and routings.
L PPM Learn PPM.
Production-process-model
Operation:
Product P
Operation:
Component C
Operation:
Sub-assembly S
P
Product P
mat. M1
res. c
Component C Sub assembly S
P
M1 S
act. P2
res d
act. P1
act. P3
res. e
res f
act. C1
mat. M3
res a
act. S1
mat. M2
comp C
M1
M2
S
C
res. d
sub-a. S
res. f res. a comp. C
res. b
M3
C
M3
C
P
M1 S M2
S
C M1 S M2 C
Assign resources and materials to each activity Assign resources and materials to each activity.
Alternative modes (resources, routings) can be defined for an activity.
APS planning cycle
Strategic network design
Demand planning
Supply network planning
Production planning /
detailed scheduling
Transportation planning /
vehicle scheduling
Order fulfilment
and ATP / CTP
External
procurement procurement
TheAPS planning cycle represents the logical order of planning tasks The APS planning cycle represents the logical order of planning tasks.
Planning tasks differ by the frequency by which they are called up.
Outline Outline
Introduction: The concept of SCM and APS Introduction: The concept of SCM and APS
APS modules APS modules
St t i t k d i Strategic network design
Supply network planning
Demand planning
External procurement External procurement
Production Planning / Detailed Scheduling
T t ti Pl i / V hi l S h d li Transportation Planning / Vehicle Scheduling
Order Fulfilment and ATP / CTP
Lesson 5
St t i t k d i i Strategic network design is
a powerful, but the least
tili d d l f APS utilized module of APS.
Strategic network design Strategic network design
Strategic Network Design
Decisions
Number of plants and DCs
Locations and capacities
Assignment of locations to each other
Assignment of products to plants
Locations and capacities
Determination of transportation links
Assignment of locations to each other
e.g. customers to DCs
Mathematical methods
He ristics MILP Cl stering techniq es
Determination of transportation links
Heuristics, MILP, Clustering techniques
Strategic network design
Planning frequency
low
high
Planning frequency
Planning horizon
long
short
D f ti
high
low
Degree of aggregation
Management level
high
low
Strategic network design
Exercise: Modelling Nutricia’s supply network design
by use of SAP APO 3 1 (based on Wouda et al 2003) by use of SAP APO 3.1 (based on Wouda et al., 2003)
SSSupplier
Plant
Customer
Supplier
Plant
Customer
Distribution
centre
Distribution
centre
Lesson 6
Forecasting is essential at Forecasting is essential at
all planning levels. Pure
forecasts can cause ampli- forecasts can cause ampli
fication of demand.
Demand planning
Use of forecast
Strategic level: design of the supply network
Demand
Planning
Operational level: production, distribution,
and procurement decisions
Short-term: update of production orders
and procurement decisions
Demand planning
Most essential in make-to-stock environment,
Collaborative forecasting between partners in the supply chain
e.g. in the consumer goods industry
Mathematical methods
Statistical forecasting techniques
Tools for incorporating human judgement
Lesson 7
Supply network planning Supply network planning
is a core module of SCM.
Huge cost savings Huge cost savings
can be gained.
Supply network planning
Mathematical methods
LP and MILP heuristics
Supply Network Planning
LP and MILP, heuristics
pp y g
Decisions Decisions
Allocation of production quantities between plants
Supply fromthe plants to DCs and fromthe DCs to customers
Smoothing out seasonal cycles in demand
Supply from the plants to DCs and from the DCs to customers
Consideration of production, transportation, and handling capacities
as hard constraints
Consideration of demand d e dates and safet stocks Consideration of demand, due dates, and safety stocks
as soft constraints
Supply network planning
Planning frequency
year
day
Planning frequency
Planning horizon
year
day
D f ti
high
low
Degree of aggregation
Management level
high
low
Supply network planning
Supply chain engineer in SAP APO 3.1
S t f th t k fi ti Set-up of the network configuration
Integration of suppliers and transporters
Assign and modify master data, e.g. product portfolio and capacities,
costs, safety stocks, demand figures, modes of transportation etc
Lesson 8
Generic model formulations
show pros and cons.
Supply network planning
Generic model formulation
Production capacity at plants
Storage and handling capacity at DCs
? ?
? ?
? ?
) ( ) ( i P p
it pijt pi
i J j
PC x a
?
?
? ?
) (i P p
j pjt p
SC y ?
p y p
Storage and handling capacity at DCs
? ? ? ?
? ? ? ?
? ? + ?
) ( ) ( ) ( ) ( i P p
j
k i P p
pjkt p
j K
pijt p
j I i
HC z x ? ?
Storage and handling costs per DC
?
? ?
ijt ijt
TC x ?
? ? ? ? ? ? ?
? + ?
pjkt pjk pjt p
z c y h
Transportation capacity per link
Storage and handling costs per DC
?
?
?
) (i P p
ijt pijt p
TC x ?
? ? ? ? ? ? ?
? ? ? ? ? ? ? P p J j
pjkt
T t
pjk
) j ( K k P p J j
pjt
T t
p
y
Aggregate demand per DC
? ? ? ?
? ? ? ?
?
) ( ) ( i P p I i
pijt
T t
pij
i J j
x c
?
?
=
) (k J j
pkt pjkt
b z
Production costs per plants
Aggregate demand per DC
Assigning attributes to pre-defined entities
Supply network planning
Planning books offer user-defined views of the solution
Safety stock planning
Additional features of SAP APO 3.1
Safety stock planning
Lot-sizing and production campaign planning
Lesson 9
PP/DS is the module PP/DS is the module
most difficult to adapt to the
application-specific application specific
features.
Production Planning / Detailed Scheduling
Decisions
Generation of production orders
Mathematical methods
Genetic algorithms Generation of production orders
Allocation of resources according
to a finite scheduling policy
Genetic algorithms
Constraint programming
Rules and heuristics
to a finite scheduling policy
Application specific
algorithms
Production
Planning /
Detailed
S h d li Scheduling
Lot-sizing, sequencing, and procurement proposals
Consideration of the availability of resources as hard constraints Consideration of the availability of resources as hard constraints
Consideration of due dates, time windows etc. as soft constraints
Production Planning / Detailed Scheduling
Planning frequency
year
day
Planning frequency
Planning horizon
year
day
D f ti
high
low
Degree of aggregation
Management level
high
low
Production Planning / Detailed Scheduling
Case study: Production of hair dyes
Box
Final Product
Dye Cream
CreamLiquid
Dispersion
Dispersion
Li id
Shampoo
Shampoo
Li id
Tube
Cream
Chemicals
Cream Liquid
Bottle
Dispersion
Chemicals
Liquid
Tube
Shampoo
Chemicals
Liquid
Processing line
cream
Filling shampoo
Processing line
dispersion
Filling cream and dispersion
and packaging final product
Processing line
shampoo
Lesson 10
Most scheduling problems Most scheduling problems
are NP-hard.
However, practical solutions However, practical solutions
are often easy to obtain.
Production Planning / Detailed Scheduling
Case study: Production of hair dyes
S l ti bt i d f th PP/DS d l f SAP APO 3 1 Solutions obtained from the PP/DS module of SAP APO 3.1
within 2 minutes
GA i t CP GA superior to CP
Alternative solvers can be
i t t d i “O ti i ti integrated via “Optimization
extended workbench”
Additional features
of SAP APO 3.1
Characteristics based planning
Shelf-life consideration
Model mix planning
Production Planning / Detailed Scheduling
Complete pegging (dynamic or fixed)
-10
Customer orders
10 20 40 10 60
20 10 40 50 10
Deficit
30 100 T t ti d
30 20 50 30
Surplus
30 100 Transportation orders
+20
Surplus
50 50 50
Production orders
50 30 20 50
Surplus
+10
80 80
Purchase orders
Lesson 11
Procurement requires a Procurement requires a
high degree of collaboration
between partners in the between partners in the
supply chain.
External procurement
Decisions
Determination of the purchase quantity
Selection of the supplier
Mathematical methods
Rule-based and heuristic
d procedures
MILP
External
Procurement
In-house or external supply?
Release of deliveries for J IT goods Release of deliveries for J IT goods
Lesson 12
ATP / CTP provide simple,
but very effective tools. y
Order fulfilment and ATP / CTP
Decisions
Matching customer orders
against available quantities
Quick response to customer requests
Capacity check for newor enhanced
Quick response to customer requests
(Available to Promise: ATP)
Capacity check for new or enhanced
production orders in response to
customer requests
(C bl t P i CTP)
Order
(Capable to Promise: CTP) Fulfilment
ATP / CTP
Mathematical methods
Rule-based ATP
Batch mode ATP (MILP)
Order fulfilment and ATP / CTP
Rule-based ATP: Bayer AG, Germany
Query from customer EXC1, for
product P1, amount Q1, date T1
Preliminary quick check with
availability chart for P1, T1
Commit order for
EXC1, P1, Q1, T1
Query for commitment
from inventory for
EXC1, P1, Q1, T1
Yes
Earliest date available for P1, 1? T2
No
EXC1 satisfied?
Commit order for EXC1, P1, Q1, T2
using query for commitment from
inventory
Yes
No
Query for commitment
from inventory or
production for EXC1,
P1, Q1, T1
Commit order for EXC1, P1, Q1, T1;
create campaign(s) for production
Yes
, Q ,
Place order for EXC1, P1, Q1, T1;
commitment after optimization run if
capable to produce
No
Order fulfilment and ATP / CTP
ATP decision cube of SAP APO 3.1
Customer order /
end item
Same product/
alternative location
Original
d
Alternative product/
alternative location
Alternative
order
Production
product
Change of location
Production
Change of location
Alternative component
Lesson 13
Customer satisfaction
finally depends on the
timely execution of y
transportation activities.
Transportation planning and vehicle scheduling
Decisions
Choice of the transportation mode (e g truck or rail) Choice of the transportation mode (e.g. truck or rail)
Integration of external logistics service providers
and offering of own logistics services (e.g. VMI)
Determination of regular freight
frequencies between locations and
of the unit transportation size of the unit transportation size
Transportation
Planning /
Vehicle
Vehicle loading and scheduling
considering time windows for delivery
Scheduling
g y
Collaboration between locations and
with external logistics service providers
Mathematical methods
Heuristics Heuristics
Local Search
Concluding remarks
Huge cost savings can be gained through efficient use of APS.
APS have been adopted in many industries.
Collaboration between partners in the supply chain including Collaboration between partners in the supply chain including
share of information and transparency of business processes
is seen as a major driver of SCM performance.
No global “optimize SCM” button provided by APS.
Expertise needed.
Optimization models often require large computational effort.
APS, especially at the detailed scheduling level, do not
sufficiently consider application specific features.
APS are most successful for intra company supply chains APS are most successful for intra-company supply chains
with centralized logistics control.
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