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Cross-Process Supply Chain Planning with SAP S/4HANA 

Components of an integrated planning process  

October 7, 2020

Good planning is undisputedly the most important basis for sustainable business success. But when is planning actually good enough? When it reconciles the processes of the various divisions of a company in such a way that products can be manufactured and delivered in line with supply and demand without any bottlenecks occurring in between. This can only be achieved through largely integrated planning.

In everyday business life this is often easier said than done. After all, the goals of the individual divisions differ greatly from one another. They are each shaped by specific conditions and environmental variables. For example, the sales department wants to be able to react as quickly and flexibly as possible to customer inquiries, while production should be as cost-optimized as possible depending on suppliers and the warehouse should optimize its inventory depending on production. Viewed over the entire supply chain, there are countless dependencies that can only be captured by integrated planning. Every change to a small detail has direct consequences in numerous other processes.

Supply chain planning is therefore an extremely important part of supply chain management. It is designed to provide forecasts of future demand in order to keep supply and demand for a product in balance. This means that sales and procurement planning as well as inventory and detailed production planning are fine-tuned and adjusted to each other as required.

Material requirements planning in SAP S/4HANA

Using the example of classic SAP material requirements planning, it is easy to see what supply chain planning means in practice. The processes of the logistics modules used by the company converge in the SAP system, at best already in the form of SAP S/4HANA. To plan a product, a bill of materials is calculated from the material master data and the production requirements. However, only materials are not enough - the work itself (referred to as work centers in SAP), quality specifications and additional production resources, such as lubricants, must also be taken into account. The routing is created.

SAP now uses the bill of material and the routing to determine the actual requirement. SAP S/4HANA works here additionally with a new level, the production version. In this way, the original planning is not lost in the event of subsequent changes, but remains saved as an older production version. The gross requirement is now calculated from the various requirements - primary requirement (number of end products), bill of material (material requirements per unit), secondary requirement (number of individual parts measured against primary requirement), tertiary requirement (additives), possible additional requirements by including a scrap quota or similar. However, in order to know which materials need to be reordered, the stock level and already running orders and the like must be offset. Finally, however, the net requirement is determined.

If and when the reordering really takes place, depends on many factors as well. Thus the order policy can vary from material to material: One business partner, for example, delivers fixed quantities periodically, another one very individually according to individual orders. Which procedure suits you best depends on the size of your warehouse, how long production takes, what delivery times your customers expect, how individual the products and batch sizes are, and so on and so forth. And now imagine that only one condition changes. A material is not available at short notice or an urgent bulk order comes in. Immediately, the entire planning process changes - without integrated supply chain planning, chaos could hardly be avoided.

Uncovering optimization potential in the supply chain
Optimizing and automating logistics as far as possible is part of the everyday tasks in every industrial company. Nevertheless, we see in many customer projects that companies are not yet exploiting the possibilities of SAP. We know the planning processes of the supply chain and many industry-specific best practices from many years of experience. Talk to us about it, together with you we will optimize your planning - for noticeably more efficiency in your supply chain.

Still have questions?

If you're interested in SAP S/4HANA and would like further information, feel free to contact us. We look forward to your inquiry!

 

 

 

John Bertolino

Sales & Marketing Director
+1 412 788 9494

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