SAP APO DP (Demand Planning) – Sample training

content and overview

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Demand Planning Overview

• Typical forecasting process enabled by Demand Planning

Consensus Forecast Mtg

Statistically Market
Demand Derived
History Intelligence
Forecast

Monthly Cycle

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Demand Planning Objective

The ultimate objective is Superior

to provide better service Customer
Service
to the customer.
Increased productivity

Reduced Fewer
Obsolete backorders
Improving forecast accuracy and Excess and stock
can serve as the foundation Inventories outs
for enabling better
performance up and down
Improved forecast accuracy
the supply chain.

People Process Technology

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Demand Planning process
conceptual overview

Preparation
New
for Forecast / Baseline Adjusted Consensus Agreed
Product
Life Cycle Forecast Forecast DP DP & SIOP
Forecast
Planning

Week 3 Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Weekly Baseline
Preparation for forecasting
Release Forecasting

Week 4 Review Baseline Weekly

New Product Forecasting Release
Forecasts

Week 1
Weekly
New Product Forecasting Forecast Adjusting Release

Week 2
Monthly
Consensus Forecasting Release

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How far ahead should we
forecast?

In Time-buckets of...

Business Forecast Long

Example: Strategic Plan 1-5 years
‗99 ‗00 ‗01 ‗02

Tactical Forecast Medium

Example: 6-18 months
Q1 Q2 Q3 Q4
Annual Production Plan
Marketing Plan

Operational Forecast Short

1-12 months
M1 M2 M3 M4

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Demand Planning - Key Participants

New Products
Customer
& Promotions

Demand
Demand Planning Planning Finance
(Hub)

Supply Planning
Sales & Marketing

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What should We Forecast?

Order management Business Planning

Product
Sales History family Production Planning

Other
Product group Master Scheduling

Item/Product
Sales Planning

Different levels of planning hierarchy require forecast

information at different levels
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Demand Planning system and
business process flow

Planning
Area
Administration Creation of
Product Promotions
Introduction/
Master End-of-Life Fine-tuning of
Data Setup Demand Plan
Creation
of the
Planning Demand Forecast
Simulation Reconciliation of
Books Design Demand Plans
Definition/
Redefinition of
Forecast models Release of
Demand Plan
Management by
to SNP
Master Data Exception
Revision
Release of
SNP
SNP Plan to DP
Monitoring of
Forecast Accuracy
Forecast Storage
Historical
Data Updates

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Importance of DP

Forecasts in Short Term Horizon used for last

stages of Finished Goods Planning-
Packaging/Deployment to Local DCs

Forecasts in Mid-Term Horizon

used for Master Production
Scheduling/Materials Planning

Forecasts in Long Term for

future Capacity Planning

Providing a better Demand Plan in the mid to long term allows

for a more responsive and flexible supply chain in the short term

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Importance of DP

• Inaccurate forecasting leads to different numbers being

targeted by different departments within the company.
This leads to:
– Extra costs due to carrying WIP, FG
– Extra costs due to overtime and related charges from expediting
specific orders
– Unresponsiveness to customer needs
– Unresponsiveness to market changes

• … and Ultimately, the Firm Suffers

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12
Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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DP Terminology

• Characteristic
• A planning object such as a product, location, brand or region.
• This one of the master data of DP and SNP. For example, the
characteristic 'location' could have the values London, Delhi and
New York.
• Key figure
• Contains data that is represented as a numerical value-either a
quantity or a monetary value. Examples of key figures used in
Demand Planning are planned demand and Actual Sales History.
• CVC
• Characteristic Value Combination is the combination of
characteristic values with which you want to plan.
• You can only plan data if you have defined such a combination.
• This is the lowest level at which you can plan
• Characteristic value combinations are planned for master planning
object structures.
• The combinations are then valid for all planning areas based on this
Master planning object structure.
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DP Terminology

• Attribute
• An attribute is a characteristic that is logically assigned and
subordinated to another characteristic.
• Navigational attributes offer a way to plan multiple objects while
achieving optimum system performance in Demand Planning.
• Attributes are used for selection, navigation and reporting, but the
data is not stored at this level
• Master Planning Object Structure
• The existence of a master planning object structure is therefore a
prerequisite for being able to create a planning area.
• A master planning object structure contains plannable
characteristics for one or more planning areas. Specific
characteristics are required for SNP, CBF and forecasting of
dependent demand.
• The master planning objects structure is the structure on which all
other planning object structures are based (aggregates etc).
• A master planning object structure forms part of the definition of a
planning area.

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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APO DP data structure

• Demand Planning Process • Planning

Flow
– Planning Area
• Data Mart
– Planning Book and data views
– InfoObjects
– Statistical tool box
– Source System
– Macro
– InfoSource
– Promotions, Life Cycle
– InfoProvider Planning and ―Like‖ Modelling
– Communication Structure – Collaborative Planning
– Transfer Structure – Mass Processing & Release to
– Update Rules SNP
– Exercises

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APO DP System Architecture:
Overview

Collaboration Interactive Planning

Planning Book I Planning Book II

Planning Areas

• Time Series
• Orders

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InfoObjects - concepts

• Planning in APO requires two key elements: Characteristics and Key Figures. They are
called as InfoObjects

• Key Figures
– These are numerical fields where values are stored or changed
– Example: Sales Orders, Forecasts

• Characteristics
– Descriptive objects that may be planned are referred to as ―characteristics‖ in APO
– Types of characteristics
• Products - example SAP Number
• Customers
• Locations - example DC, Plant

• We can use system defined InfoObjects or own InfoObjects

• Exercise
– Identify the type of following InfoObjects
• Date
• Forecast Error
• Manual Forecast
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APO DP InfoCube: Data Structure

Customer Product
 Product group
Characteristics

 Sales organization  Steel Grade

 Customer Group  Thickness Group

Versions Time
 Quarters

 Version  Months

 Weeks
Key figures

 Historical data
 Manual adjusted forecast
 Planning Quantity
 Sales Order
 Deviation FC and Allocation

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20
InfoObject – Exercise – in APO DP
system

Key Elements of APO DP Data Mart – Administration

Workbench

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Creating InfoCube Structure in SAP
APO

Each Characteristic
must be assigned a
Dimension

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Create InfoObjects in SAP APO

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning
Object Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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APO DP Configuration objects

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APO DP Data Structure

Planning objects (MPOS) Key Figures

Sales Production Stock

Assign Key Figures

Aggregate
by Aggregate
Brand Sales

… Customer Production

Details
Sales
APO Planning Version Brand

Production
Product
Planning UOM
Stock

Time Bucket Profile

Customer Planning Area

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DP Planning Area

• Planning areas are the central data structures for DP and SNP
• Specifications of a Planning Area
– Unit of measure in which data is planned
– Currency in which data is planned (optional)
– Currency conversion type for viewing planning data in other
currencies (optional)
– Storage buckets profile that determines the buckets in which
data is stored in this planning area
– Aggregate levels on which data can be stored in addition to the
lowest level of detail in order to enhance performance
– Key figures that are used in this planning area
– Settings that determine how each key figure is disaggregated,
aggregated, and saved
– The assignment of key figures to aggregates
– Assign Master Planning Object Structure (MPOS) to the
Planning Area
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Planning area – Time Bucket Profile

• There are two kinds of time bucket profiles

– One is used for storing data (the storage buckets profile)

– Other for planning the data (the planning buckets profile)

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 Planning Bucket Profile – in SAP APO
system

• Planning Bucket Profiles are used to define the buckets in which data is displayed
and planned
• You can plan in monthly, weekly, daily or (combined with fiscal year variants) self-
defined periods

Our example shows a forecast horizon

comprised of four weeks and five months

Time bucket 1 2 3 4 5 6 7 8 9

Today Wk1 Wk2 Wk3 Wk4 Month1 Month2 Month3 Month4 Month5

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Storage Bucket Profile - Example

 If we select the periodicities month and week in the storage buckets profile, data
for the months of June and July 2001 is stored in the following buckets, also known
as technical periods

Time span Number of days

Friday through Sunday, 3 days

June 1-3
Monday through Sunday, 7 days
June 4-10
Monday through Sunday, 7 days
June 11-17
Monday through Sunday, 7 days
June 18-24
Monday through Saturday, 6 days
June 25-30

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 Storage Bucket Profile

• A storage buckets profile defines the time buckets in which data based on a given
planning area is saved

• In a storage buckets profile, we specify:

– One or more periodicities in which you wish the data to be saved
– The horizon during which the profile is valid.
– A time stream (optional) – to specify the calendar of the organization

• Include in the storage buckets profile only the periodicities we need because the
technical periods take up storage space. On the other hand, we must include all
the periodicities in which you intend to plan

• The way data is saved is further defined by the way you customize the
Calculation type and Time-based disaggregation in the planning area

• Once a storage buckets profile is in use, it is not possible to change it. It is

therefore sensible to specify a relatively long horizon

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 APO DP Planning Book

• Defines the content and layout of the interactive planning screen

• Planning book is based on a planning area. The end user is aware of the planning
book, not the planning area
• There is no limit on the number of planning books you can have for a planning area
• In the planning book you define the following elements:
• Key figures and other rows
• Characteristics
• Functions and applications that can be accessed directly from this planning book
• User-specific planning horizons
• User-specific views on the planning book
• In a planning book you specify with which functions you want to work. APO Demand
Planning comes with preconfigured views for:
– · Univariate forecasting (time series forecasting)
– · Causal analysis
– · Composite forecasting
– · Promotion planning
You also define one or more of your own data views
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User-Defined Planning View (Data
View)

Planning view:

The planning book

determines the horizon
and the time grid for
planning

You can include actual

data

You can create macros

The planning view to calculate key figures
determines which
key figures are displayed
in interactive planning

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Planning book - selection variant

• Groups together objects that are planned by a demand

planner in one planning run.

• For example, a selection may contain all the brands and

products in the region for which the demand planner is
responsible.

• A selection variant, sometimes known as a selection ID or

just selection
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Interactive APO DP Planning Book-
features

User specific settings

• Data Selections
• Navigation Path,
4 Drill-downs
2
• Key-figures,
display/hide
3 • Pivot sorting
• Switch of
Columns & Rows

1 • Activate /
Deactivate notes
5
• Save Column
6 width
• Calendar
• Unit-of-Measurers
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Interactive APO DP Planning Book-
features

 Disaggregation / Top-down Planning

Input entered at
Category level
Aggregated View

Results displayed
Product level
Detail View

2,469 = 75% of 3,274 Underlying

805 = 25% of 3,274 Proportions

DP supports real-time top-down planning

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Interactive APO DP Planning Book-
features

 Aggregation / Bottom-up Planning

Input entered at
Customer, Product
Detail View

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Macros

• Macros are used to perform complex calculations

quickly and easily

• Macros are executed either directly by the user in

interactive planning or automatically at a predefined
point in time

• The definition of macros is optional

• Alert Macros can be created to generate an alert in case

of adverse situation in planning

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38
Example of DP Macros

 Forecast + Promotion
 This macro calculate the
arithmetic average of Statistical
Forecast, Sales Forecast and
Logistics Forecast(consensus-
based planning), the result of
average forecast data plus
Promotion Data will be put in the
Final Forecast cell
 Forecast deviation during consensus—
based planning
 The alert macro compare the
figure of the Logistics Forecast
data with that of Sales Forecast
data, if for the deviation is more
than 10 percent, a alert will be
generated.
 Sales Forecast
 This macro multiplies the manual
correction with the planned price.
Result is the expected sales.

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting,
causal analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Definition of Forecasting Models

• In this process, you create the forecast profiles on which automatic calculation of the
forecast is based
• Basic questions to be answered before modeling
• How many products do I wish to forecast?
• Do I have historical data for the products I wish to forecast?
• What is the quality of this historical data? Does it contain errors? Is data missing? For how
many periods do I have historical data?
• Is the present market situation similar enough to the past situation that I can use existing
historical data? Or has there been some major structural or economic change (for example,
German reunification) that renders my historical data unsuitable for forecasting future
demand?
• If I have no historical data for a product, is it possible to forecast that product using the
historical data of another product?
• For which products do I already know the pattern of historical data, that is, am I aware of
trends or seasonal patterns in the data?
• Do I have outliers in my historical data? Are these due to promotions or to other factors?
• Am I aware of multiple causal factors that explain the demand for a product?
• Do I wish to combine several forecasting methods? For which products? (use composite
forecasting)
• Do I wish to model the start-up phase or the end-of-life phase of one or more products?
(Phase-In/Phase-Out Modeling)
• Does my company intend to run promotions for any products?

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Common forecasting methods

Forecast methods make estimates of the future based on past patterns and relationships

– Time Series (Moving Average, Exponential Smoothing)

• Purpose is to model the patterns of past demands in order to project
them into the future
• Good in very short-term horizon
• Requires past, internal data to forecast the future
• Smoothes randomness
– Qualitative (Judgment)
• Requires strong product knowledge
• Good for promotional products
– Causal (Multiple Linear Regression)
• Makes projections of the future by modeling the relationship between
demand and other external variables (model causes of demand)
• More time intensive and less easily systematized
• Forecasters require additional training in statistics
– Composite Forecasting
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Univariate Profile

• Supports constant, trend, and

seasonal patterns
• Toolbox includes:
– Moving average
– Simple linear regression
– Exponential smoothing Forecasting
– Holt-Winters
– Croston‘s method

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Univariate Profile

Entries
Historical input
Version,
Version and key figure Key figure

Model parameters
Forecast strategy,
Strategy, seasonal length, Periods per season,
smoothing parameters Parameters: a, b, g

Control parameters
Without Leading Zeros,
Outlier correction, adjustment Outliers,
of corrected history, Days in Period
workdays correction

MAD, total error,

Forecast errors MAPE, RMSE,
MSE, MPE

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Univariate Forecast Strategies

Forecast Model

 Constant
 Moving average
 Weighted moving average
Manual  Trend
 Seasonal
 Seasonal trend
 Copy history
 Croston

Model Selection

Automatic  Check for trend

 Check for seasonal
 Check for seasonal trend

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Forecast Profiles

Profiles: Master
• Assign a Planning Area Forecast profile
• Define which key figure you
want to be forecasted
• Define past and future Univariate profile
periods
• Specify models to be used MLR profile
for:
– Univariate forecast
Composite profile
– Multiple linear regression
– Composite forecast

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Composite Profile

Example:
• Define the forecast
methods you want to use Constant: 30%
• Define the percentage + Seasonal: 30%
weighting factors + MLR: 40%
• Define weighting profiles = final forecast

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Composite Profile

• Weighted average of multiple forecast methods

• Simple average

Univariate
1 Forecast
Univariate
Combine Result
...
MLR & MLR
Reconcil
e
n

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Definition of Forecasting Models - Steps

• Decide which products to forecast and which models to use.

• Create a master forecast profile

• Create a univariate profile and/or an MLR profile and/or a

composite profile.

• If necessary, maintain the assignment of forecast profiles to

selection IDs (selection variants). For example, you might
have a selection ID for each product family you forecast and
different forecast profiles for different product families.

• Create alert profiles in the Alert Monitor that specify which

alerts can be viewed by which users.

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional
planning, life cycle management, and “like” modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Phase-in / Phase-out Modeling

Phase Out - Phase In

• When you introduce a new product or phase out an
existing product, you expect the demand to be noticeably
different to that in the ―mature‖ phase of the product‘s
life. Phase-in/out modeling lets you take this behavior
into account.

Old New
Product Product

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Life Cycle Planning

The basic idea of the life cycle planning in APO is to use

the history of another product. We can use the history of
two or more products instead of single one

Identify similiar products Launching of a New Product

Product
Old New
Product
? New
Product

aixi

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Planning Book: Promotion Planning

Forecast simulation

Sales Total sales:

Profit Total profit:

Promotion Promotion patterns

‘95 ‘96

-10% ‘97 ‘97

Price Planner

Quantity

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Promotion Planning

Corrected Forecast
+ Promotion

History
(Including a Promotion)

Corrected History Forecast

Past Future

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Promotion Planning Process Flow

In Interactive Planning,
In Interactive In Promotion the demand planner
Planning, Planning, views the impact of all
the demand planner promotions are planned promotions on
creates a forecast created total forecast sales and
Plan and saves it in a Promotion ID makes final
adjustments
to the demand plan

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Promotion Planning Steps

1. Create the promotion

2. Specify the level and characteristic values for promotion
3. Activate the promotion

The main information that are specified at the creation of promotion are

• The period type (week/month)

• The number of periods and the start date
• Whether absolute or relative values are used
• The cannibalization group

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Promotion Planning - Cannibalization

• In some cases a promotion for a product causes a

decrease in the demand for a related product, which is
substituted by the promoted product. This effect is called
the cannibalization of the demand

• The input to the system is typically in the following format

– An increase of 50 units of promoted products lead to a decrease

of 20 units of substituted products

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Release Demand Plan

• Release to SNP
• The demand plan can
be used as a basis for
making sourcing,
deployment and
transportation
decisions
• Release to R/3 Demand
Planning
• It transfers the demand
plan to Demand
Management in R/3,
and creates planned
independent
requirements there.
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Release DP to SNP

Planning Area
liveCache

Planning Area liveCache

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Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case
scenarios, In-class exercises, discussion, forum, round tables,
etc
• Summary / recap
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Books meet the road !

• In-class exercises for different topics

• Real hands on the SAP APO system
• Discuss real life experience / client case studies
• Round table discussion / interaction /forums
within the class
• Get prepare for SAP APO/SCM certifications
• Mock up interview tips, questions and
preparations

©. All rights reserved Copyright © 2005 TeknOkret Services. All Rights Reserved.
Sample course content

• Demand Planning Concepts

• Importance of Demand Planning
• SAP APO Demand Planning terminology
• APO Data structure: Source systems, InfoObjects/Catalogs and
InfoCubes
• Planning components like Planning Area, Maser Planning Object
Structure (MPOS), Planning Books and Macros
• Various forecasting methods such as: Univariate forecasting, causal
analysis and composite forecasting
• Understand marketing and sales tools such as promotional planning,
life cycle management, and ―like‖ modelling
• Release DP to SNP (Supply Network Planning)
• On hands SAP/APO system and real life client DP case scenarios,
In-class exercises, discussion, forum, round tables, etc
• Summary / recap
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Summary / Recap

• Demand Planning Overview • Planning Books

• Data Mart • Promotions, Life Cycle Planning
• Planning Area Administration and ―Like‖ Modelling
• InfoCubes • Mass Processing & Release to
• Current Settings SNP
• Statistical Toolbox • Exercises

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 THANK YOU

©. All rights reserved Copyright © 2005 TeknOkret Services. All Rights Reserved.