Statistical Forecast Errors

Posted by Suresh Sellaiah on 14-Sep-2017 08:07:28

Forecast Accuracy defines how accurate the forecast works against the actual sales and is usually defined in percentage terms as;

Forecast Accuracy = 1 – Forecast Error

Forecast Error determines the deviation between the forecast and the actual demand/sales.

As Evan Esar’s saying goes "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today".

So, to be able to react quickly, it is very important to understand why this deviation has occurred. As there are various Error Measures available in software tools such as SAP APO or SAP IBP, it is vital to understand which error measure is applicable under what circumstances.

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Topics: SAP APO, Statistical Forecasing, Demand Planning, Forecast Error

SAP APO - Managing large setup matrices in a complex manufacturing environment

Posted by Satish Satyamurthy on 12-Sep-2017 13:40:27

When scheduling production order sequences in a manufacturing process, there are times when capacity losses are incurred when transitioning between orders. This can be due to changes in materials, cleaning between production, tooling changes etc. This loss in capacity can be referred to as ‘Change Over’ or ‘Setup’.

By reducing changeover times, you can increase the efficiency of the manufacturing asset and the productive manufacturing time.

A common way to represent change over losses is via a ‘Setup Matrix’. Here the transitions between different characteristics of the products being manufactured are represented.

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Topics: SAP APO, SCM Optimisation, PP/DS, setup matrices, matrix

SAP APO - Planning and Scheduling using Resource Networks

Posted by Raghava Itharaj on 06-Sep-2017 20:30:30

A high-level insight on Resource Networks was provided in one of our earlier blogs entitled “Semi-Finished Goods Scheduling within SAP APO”. In this blog, I intend to provide a more detailed insight on how Resource Networks can be utilised in both SAP APO Planning and Scheduling scenarios.

A Resource Network is best described by the physical connection between Resources of different production lines. It models the flow of materials through these lines from one Resource to another. Some scenarios include:

  • Scheduling across the allowable connections between packaging lines and semi-finished goods lines
  • Recognising the prioritisation across multiple semi-finished goods lines feeding into a packaging line
  • Providing flexibility to switch between alternative input resources in the case of capacity constraints
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Topics: SAP APO, SCM Optimisation, PP/DS, snp, supply network planning, resource networks

Olivehorse & Every Angle SAP APO Reporting Module

Posted by Chris Stainthorpe on 18-Jul-2017 15:17:31

Supply chain planning experts Olivehorse and Every Angle are developing a common SAP APO reporting module in Every Angle's business analytics tool. The solution will be launched and presented later this year in a joint event, hosted in Amsterdam.

SAP APO (Advanced Planning and Optimization) is at the planning heart of SAP Supply Chain Management (SCM). It dates back to 1998 and over the years has gained in maturity, now forming the backbone of many SCM processes. However, APO was never designed with reporting in mind. This has led many companies to create bespoke reporting solutions dependent upon BI, ABAP and Microsoft Excel. Often though, the process to create reports is cumbersome and costly.

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Topics: SAP APO, Every Angle, Analytics

SAP APO - SNP Optimizer Constraints

Posted by Chandra Shaktawat on 13-Jul-2017 09:49:58

Supply Planning is an important function in every industry which tries to achieve a balance between customer service, inventory targets and resource utilization. A supply planner’s primary role is to deliver a tactical plan which meets the demand on time, covers safety stock targets at the distribution centres in the supply chain network while also ensuring that resources in the factories are utilized efficiently. A supply planner basically works on integrating the manufacturing and sales side of business and aims to optimize both ends.

The Manufacturing or Production function always prefers to produce according to cost effective lot sizes, minimal changeovers, production cycles and sometimes other constraints like labour or semi-finished material. On the other hand, Sales or Customer Fulfilment functions have different priorities which mainly include meeting customer demand in full and on time, and meeting inventory targets without going below or above targets significantly. These two sides of business often contradict each other and achieving a plan which has been optimized from both angles is challenging.

Usually, a medium term tactical supply plan is generated periodically (weekly, fortnightly or monthly). This plan is normally capacity constrained and contains decisions regarding production, sourcing and distribution of products through the supply chain.

A lot of companies who purchased  SAP’s Supply Chain Management (SCM) application use the Advanced Planning and Optimisation (APO) Supply Network Planning (SNP) Optimizer as a tool to generate the capacity constrained mid-term plan. It is a powerful tool which delivers a plan that respects resource contraints and optimizes the supply chain within a given cost framework. If implemented correctly, it can result in big cost savings for any organization. In this blog, I will try to cover several aspects related to the SNP Optimizer.

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Topics: SAP APO, SCM Optimisation, optimizer, snp, supply network planning

Demand Driven MRP & The Demand Driven Adaptive Enterprise

Posted by Jonathon Vaiksaar on 17-May-2017 09:12:50



 Demand Driven MRP & The Demand Driven Adaptive Enterprise

The greatest barriers to supply chain delivering the desired service level at the lowest possible cost are lead-time and variability. Our lead-times are longer than customer expectations, meaning we must rely on forecasting and inventory to deliver service. The issue with forecasting is that it is never correct – meaning we never sell what we forecast, and the longer the lead-time the less reliable the forecast becomes. The combination of inaccurate forecasts and long lead-times with a conventional MRP planning solution (which relies on perfect demand, lead-time adherence and dependency between all nodes) results in a bimodal inventory distribution. The result is an excess of some items, and shortages of others, with the inventory position oscillating between feast and famine leading to poor service, despite high inventory and high expediting fees.

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Topics: DDMRP, R+, Demand Driven Adaptive Enterprise, DDAPO

SAP Integrated Business Planning - Agile Implementation

Posted by Ian Brister on 09-Feb-2017 13:36:59

There are many blogs on the topic of Agile, and there are many blog posts on the topic of SAP Integrated Business Planning (IBP). But not many blogs on the combined topic of Agile IBP Implementation! In this blog I intend to share my thoughts as to how a SAP IBP implementation is suited to an Agile approach. Really suited!

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Topics: IBP, IBP for demand, S&OP, agile

SAP Integrated Business Planning - Outlier Detection and Correction

Posted by Suresh Sellaiah on 22-Dec-2016 08:09:16

As SAP continue to enrich the functionality of Integrated Business Planning (IBP), in this blog I am going to describe the outlier detection and correction methods offered within IBP for demand (as at release 1608). I will not however be discussing which of these methods are the best, as from my experience I have found that the rules and methods vary depending on the organization’s perspectives and processes followed.

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Topics: IBP, IBP for demand

Semi-Finished Goods Scheduling within SAP APO

Posted by Chandra Shaktawat on 07-Dec-2016 13:59:56

Short-term production scheduling is a key business process that ensures efficient use of scarce manufacturing resources, alignment of raw materials and flexibility when tackling manufacturing challenges. Whilst scheduling of Finished Goods (FG) is common place in SAP Advanced Planning & Optimisation (APO) Production Planning/Detailed Scheduling (PP/DS) implementations, an area often overlooked is the scheduling of Intermediates or Semi-Finished Goods (SFG) production.

Quite often this is a manual process, or is controlled by spreadsheets and/or third party/non-SAP systems which makes it challenging to manage the alignment between the SFG and FG schedule.

This blog is intended to highlight the main challenges and importance of the SFG scheduling process and present an overview of the capability within APO PP/DS that can be used to deal with these challenges.

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Topics: SAP APO, PP/DS, Scheduling

Attribute Transformations with SAP Integrated Business Planning

Posted by Jacky Jain on 30-Nov-2016 12:26:36

In this blog I will walk through the principles of ‘Attribute Transformations’ within SAP Integrated Business Planning (IBP) and discuss the basics of implementing such transformations.

We will also look at how some demand planning scenarios like displaying Year -1 data, Realignment (which is not currently offered as standard within SAP IBP), Distribution Centre closures and Product Substitutions can be achieved using Attribute Transformations.

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Topics: IBP, IBP for demand, S&OP