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Enterprise Systems Optimization Introduction EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012. Course Objective. Supply chain management (SCM) concepts, modeling, configuration, integration, data transfer, and supply network planning and optimization.

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Enterprise Systems OptimizationIntroductionEGN 5623 Enterprise Systems Optimization(Professional MSEM) Fall, 2012

course objective
Course Objective

Supply chain management (SCM) concepts, modeling, configuration, integration, data transfer, and supply network planning and optimization.

With a focus on SAP implementation

scm scope

Single facility SCM

    • Increased planning capabilities for a single facility
        • Finite-capacity scheduling
  • Multiple facility SCM
    • Integrated planning for the entire supply chain network
        • Multiple plants and distribution centers
        • Multiple vendors
        • Multiple customers
        • Multiple transportation options
SCM Scope
erp operations related to scm

Related ERP Modules

    • Materials Management (MM) and Production Planning (PP) modules
        • Sales and Operations Planning (SOP)
        • Forecasting
        • Master Scheduling
        • Material Requirements Planning (MRP)
        • Capacity Requirements Planning (CRP)
        • Order release and receipt
ERP Operations related to SCM
erp scm basics sap view

SAP ERP:

    • Holds master data for materials, plants, customers, vendors, purchasing information records
    • Holds transactional data (e.g., sales orders, planned orders)
    • Is where plans get executed
  • SAP SCM:
    • Is where “advanced planning” happens
    • Imports master and transactional data from ERP
    • Sends plans back to ERP for execution

ERP

SCM

Core Interface (CIF)

ERP & SCM Basics (SAP View)
scm exercises plan with gbi v 1 0

Review Master data

  • APO Demand planning
  • Planning in SCM
    • Supply Network Planning (SNP) Heuristics
    • Deployment and Transport Load Builder (TLB)
    • Capable to Match (CTM)
SCM Exercises Plan with GBI v 1.0
modules related to ecc and scm
The products and modules involved in the SCM exercises are:
    • ERP (ECC 6.0):
      • MM,
      • PP,
      • SD
    • SCM 7.0:
      • DP (Demand Planning),
      • SNP, and
      • Deployment
Modules related to ECC and SCM
slide10

Introduction to SCM and SAP APO Theories & ConceptsEGN 5623 Enterprise Systems Optimization(Professional MSEM)Fall, 2012

intro to supply chain
Materials
    • Any commodities used directly or indirectly in producing a product or service.
      • Raw materials, component parts, assemblies, finished goods, and supplies
  • Supply chain
    • Flow of materials through various organizations from the raw material supplier to the finished goods consumer.
Intro to Supply Chain
supply chain management
Definition
    • All management functions related to the flow of materials from the company’s direct suppliers to its direct customers.
  • Functions included:
    • purchasing, traffic, production control, inventory control, warehousing, and shipping.
  • Two alternative names:
    • Materials management
    • Logistics management
Supply Chain Management
supply chains definition

Supply Chain

    • A supply chain is the network of organizations, people, technology, activities, information and resources involved in the production of a product or a service
    • Includes suppliers, manufacturers, transporters, warehouses, retailers and customers
  • Production System
    • A manufacturing subsystem that includes all functions required to design, produce, distribute, and service a manufactured product.
  • A Supply Chain consists of one or many production systems that work together in the fulfillment of a customer order
  • Best viewed as a network
Supply Chains Definition
supply chain for steel in an automobile door

MINING

COMPANY

Mines iron ore

STEEL

MILL

Forms steel ingot

STEEL

COMPANY

Forms sheet metal

Iron

ore

Steel

ingots

Sheet

metal

AUTOMOTIVE

SUPPLIER

Makes door

AUTOMOBILE

MANUFACTURER

Makes automobile

CAR

DEALERSHIP

Does preparation

Car

Car

door

Prepared

car

FINAL

CONSUMER

Drives automobile

Supply Chain for Steel in an Automobile Door
supply chain management in a manufacturing plant

Receiving

and

Inspection

Raw

Materials,

Parts, and

In-process

Ware-

Housing

Production

Finished

Goods

Ware-

housing

Inspection,

Packaging,

And

Shipping

Customers

Suppliers

Materials Management

Warehousing and

Inventory Control

Shipping

and Traffic

Purchasing

Production

Control

Supply Chain Managementin a Manufacturing Plant

Physical materials flow

Information flow

logistics
Logistics usually refers to management of:
    • the movement of materials within the factory
    • the shipment of incoming materials from suppliers
    • the shipment of outgoing products to customers
Logistics
movement of materials within factories

The typical locations from/to which material is moved:

Incoming

Vehicles

Receiving

Dock

Quality

Control

Warehouse

Work

Center

Other Work

Centers

Packaging

Finished

Goods

Shipping

Shipping

Dock

Outgoing

Vehicles

Movement of Materials within Factories
slide19

Shipments To and From Factories

  • Distribution Resource Planning
    • Distribution resource planning extends DRP so that the key resources of warehouse space, workers, cash, and vehicles are provided in the correct quantities at the correct times.
analyzing shipping decisions
The “Transportation Problem”
    • Problem involves shipping a product from several sources (ex. factories) with limited supply to several destinations (ex. warehouses) with demand to be satisfied
    • Per-unit cost of shipping from each source to each destination is specified
    • Optimal solution minimizes total shipping cost and specifies the quantity of product to be shipped from each source to each destination
Analyzing Shipping Decisions
warehousing
Definition
    • Warehousing is the management of materials while they are in storage.
    • Viewed as distribution center (DC)
  • Warehousing activities:
    • Accounting
    • Ordering
    • Storing
    • Dispersing
Warehousing
warehousing1
Record keeping within warehousing requires a stock record for each item that is carried in inventories.
  • The individual item is called a stock-keeping unit (SKU).
  • Stock records are running accounts that show:
    • On-hand balance
    • Receipts and expected receipts
    • Disbursements, promises, and allocations
Warehousing
characteristics of the sc network

Each node may consist of a production system of its own

  • Links in the network represent a business relationship between two nodes
    • e.g. transportation of a product between two nodes
  • The number of levels in a supply chain varies and depends on the complexity of the product
  • Flows can skip levels by that:
    • Supplier ships direct to DC
    • Manufacturer ships directly to customer
  • The decoupling point is the shift occurs from make-to-stock to make-to-order
    • The decoupling point is not fixed to one level of the supply chain and is influenced by postponement strategies (e.g. Dell)
Characteristics of the SC Network
characteristics of the sc network1

Multiple Products, each with possibly different Bills of Material and multiple configurations

  • Multiple Suppliers for raw materials, parts or subassemblies
  • Multiple Subcontractors
  • Multiple Plants possibly containing a wide variety of equipments
  • Multiple Warehouses
    • Distribution centers, local, regional and factory warehouses
  • Different means of Transportation (air, sea, rail, FTL, LTL) either leased, owned or contracted
  • Different information systems and communication channels
  • People with various skills at all levels of the organization
Characteristics of the SC Network
example of costs and revenues in the supply chain

Costs

    • Production and purchasing costs
    • Setup or changeover costs
    • Transportation and handling costs
    • Hiring and firing costs
    • Overtime costs
    • Inventory costs
    • Promotional and advertising costs
    • Renting and leasing costs
    • Subcontracting costs
    • Overhead
    • Capital investments and depreciation
    • Taxes and duties
  • Revenue
    • Customer is the only source of revenue
      • From sale of products, spare parts, materials or service
Example of Costs and Revenues in the Supply Chain
example of constraints

Productivity constraints

  • Equipment capacity constraints
  • Labour availability
  • Technological constraints
  • Inventory constraints
  • Purchasing, manufacturing and distribution lead times
  • Demand uncertainties and seasonalities
  • Service requirements
  • Budget
  • Regulations and other constraints
Example of Constraints
categories and attributes of a supply chain
Categories and Attributes of a Supply Chain

- Reproduced from Fleischmann B., Meyr H, Hierarchy and Advanced Planning Systems, Handbooks in OR and MS, Chapter 9, Elsevier, 2003, pp 457-523

types of production systems

Pure Inventory Systems

    • Simplest form of logistic system
    • Only procurement activities with no production or complex distribution processes
    • Example: wholesale or retail operations where items are purchased
  • Continuous production Systems
    • Manufacturing of a few families of technologically related products in large quantities
    • Example: Assembly lines or fabrication lines
  • Intermittent production Systems
    • Batch production of many products which share several processing centers
  • Project based systems
    • Production of a unique complex product such as a ship or a bridge
Types of Production Systems
production strategies

Make to Stock

    • Production is based on forecasted amounts for stocked items
  • Make to Order
    • Production of a product is made for a customer order in the quantity specified by the order
Production Strategies
2 hierarchical planning

Hierarchical planning was first introduced by Robert Anthony in 1965* as a three level management framework that consists of:

    • Strategic or long-term planning
    • Tactical planning (or management control) for mid-term planning
    • Operational planning for short term planning
  • The results of one each level are considered as an inputs to the lower level planning
  • Effective implementation and control of the plans requires:
    • An execution layer that captures the events as they occur
    • Feedback loops at all levels
2. Hierarchical Planning

* R.N. Anthony, Planning and Control Systems: A Framework for Analysis, Cambridge. Mass., 1965

hierarchical planning framework

Material programs

  • Supplier selection
  • Cooperation
  • Plant location
  • Production systems- Subcontractors
  • Physical distribution structure- Transportation strategy
  • Product program- Strategic sales planning

Long term

  • - Personnel training
  • - Contracts
  • - Material Requirements Planning
  • - Master production Scheduling
  • - Capacity planning
  • - Distribution planning
  • - Mid-term sales planning

Mid term

  • - Personnel scheduling-- Material ordering
  • - lot-sizing- operations scheduling- shop floor control

- Warehouse replenishment- Transportation planning

  • - Mid-term sales planning
Hierarchical Planning Framework

Short term

EXECUTION

Flow of goods

Information

Feedback

slide38

Introduction to SCM and SAP APO SAP Implementation EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012

sap business suite
SAP Business Suite

SAP NetWeaver

SAP PLM

SAP ECC

SAP

SRM

SAP CRM

SAP SCM

planning with sap erp scm

Basic Components of SAP SCM

SAPECCERP

SAP SCM(includes SAP BW)

Core Interface (CIF)

  • Demand Planning
  • Supply Network Planning and optimization
  • Production Planning with capacity considerations
  • ATP
  • CTP
  • Detailed Scheduling
  • Deployment
  • Transportation planning
  • Vehicle routing and scheduling
  • Mater data
    • Materials
    • Locations
    • Partner
    • Plants
    • Info records
  • Transactional data
    • Customer orders
    • Production orders
    • Purchasing orders
  • Execution
Planning with SAP ERP & SCM
planning at supply chain level

SAPECC 1

Core Interface

SAPSCM

SAPECC 2

- Planning may be done centrally

SAPECC n

Planning at Supply Chain Level

- Each SAP ECC component covers one or more locations In the network

sap scm functionality
SAP SCM Functionality

THEORY AND PRACTICE OF ADVANCED PLANNER AND OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal

sap scm modules
SAP SCM Modules

THEORY AND PRACTICE OF ADVANCED PLANNER AND OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal

cost based optimization

Cost or price driven

  • Mixed integer programming
  • Must define all sourcing, production, transportation, inventory costs and constraints
Cost-Based Optimization
supply planning tasks and output for scm

Tasks

    • Identify sources for finished products
    • Plan and consider safety levels in any location
    • Distribute production over plants
    • Choose production resources in plants
    • Explode bill of materials in plants
    • Identify sources for supply of raw materials and components
  • Outputs
    • Purchase requisitions
    • Stock transport purchase requisition
    • Planned production orders
Supply Planning Tasks and Output for SCM
sap access through sapgui sapgui download

The latest SAP GUI release posted on SAP @CSU, Chico web server http://worker.cob.csuchico.edu

User = sap; Password = sapgui4me.

This GUI works on Windows 7 systems, as well as Vista and Windows XP.

SAP Access through SAPGUI SAPGUI Download
sap erp scm clients userid password

SAP SCM

Client: 600

Userid: fiu-101 to fiu-130

Initial password: SAP4US

SAP ERP/SCM Clients, Userid, Password
exercises
Exercises:

Overview of SCM (APO) Master Data

1) Location master data in APO

2) Transportation lanes in APO

3) Product master data in APO

4) Resource master in APO

5) Production Process Model in APO

6) Quota Arrangement in APO

7) External Procurement Relationships in APO

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