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.
Major challenges with SFG scheduling
SFG scheduling plays an important role in many process industries such as Food & Beverages (brewing, tea, spreads, savoury etc..), Home & Personal care (lotions, shampoos, toothpaste, etc..), Chemicals and Pharmaceuticals in achieving an efficient production plan. It is not always easy however to handle the scheduling of multiple levels of a Bill of Material (BoM).
The management of the SFG will differ depending on both the type of industry and SFG. For example, the SFG could be a liquid, paste, powder, tablet etc., and it could be stored in silos, big bags etc. (or not even stored at all and treated as a ‘throughput’ process).
One of the biggest decisions planners face with a SFG scheduling design is to what degree of complexity or constraints should be modelled in the scheduling tool. Quite often, the scheduling process becomes very complex by building a lot of constraints in the system which are not production bottlenecks and hence do not affect the production throughput. So getting the balance right between complexity and usability is important.
In situations where the SFG processing acts as a bottleneck and affects the FG schedule, it becomes important to have the right schedule for the SFG to ensure that SFG orders and the associated raw materials are available in time. Also that resource capacity is used efficiently by taking into account factors such as changeovers, product mix, alternates, maturation, labour and storage.
The FG demand could be volatile and any changes in the short-term plan of the FG should reflect back onto the SFG. Similarly, by managing the SFG, it can help the raw material planner react quickly to the changing demand and focus on making the required raw materials available in time, hence reducing inventories and avoiding stock outs.
Constraints such as maturation or any form of processing (e.g. drying) which requires the SFG to be stored for a defined period of time must be taken care of. This means the SFG must be produced early enough to allow it to be used on time in the FG, whilst ensuring that at the same time it is not produced too early, which would render it unusable and lead to waste.
In some scenarios, the SFG will flow directly into the FG process without being stored. In other scenarios the SFG will be stored in tanks, silos, big bags, etc., prior to being consumed by the FG. In this case, there is an element of SFG pre-build that needs to be modelled. However, sometimes it is not straightforward to answer the question around storage – i.e. if the intermediate is held for a short duration in buffer tanks and if the tanks are not really the bottlenecks, it may not make sense to model these in the scheduling tool.
In some industries, it may be necessary to accurately model SFG storage tanks in order to generate a feasible schedule. There are several factors which make scheduling with tanks challenging such as the representation of capacity in terms of volume rather than time. With storage resources, throughput is based on preceding and succeeding operations, in other words rates of inflow and outflow of a product and hence it can vary significantly based on capacities of other resources which feed or consume from the tank.
In most situations, tanks store only one product at a time, and it may not be possible to use the entire capacity of a tank if a certain product doesn’t fill the tank completely. Tanks, like any other production resource, have their own changeovers or cleaning and may not be usable for a considerable amount of time.
Types of modelling for SFG scheduling
SAP APO PP/DS provides a variety of tools and algorithms to plan SFG with these constraints and handle the challenges listed above. Some of these are SAP standard, however some techniques have been specially developed by Olivehorse.
Dynamic & fixed pegging
Pegging is part of the standard APO tool which can be used to illustrate the links between FG and SFG. The pegging link can be Dynamic – as the orders are rescheduled, the link can be broken and new orders can be linked, or Fixed – the planning algorithms do not break the link. As well as orders, pegging can also indicate where stocks can be pegged. However, this is not visually represented on the scheduling board as shown below.
No standard SAP reports are available that show pegging across multiple FG / SFG. However, we have developed a report whereby pegging relationships between multiple parent/child products can be seen in both APO and in ECC.
Dynamic PP/DS alerts can be used to determine when the allowed pegging relationships have been violated, either producing the SFG too early or too late. For example, if the SFG can be stored in a warehouse, the business rule could be to target a pre-build of between 2-5 days (i.e. you need the SFG at least 2 days before packing but it should not be produced more than 5 days prior to packing). In this case, the PP/DS alerts can be used to highlight via a ‘blinking’ order when the pegging condition has been violated.
In certain planning scenarios, the SFG can logically be made on several different mixers and the FG item can be packed on multiple different packing lines. However, there may be pre-defined allowed relationships between mixers and packing lines. This can be due to a complex network of pipes and intermediate storage tanks. This scenario can be modelled by using Resource Networks. The PP/DS Optimiser can then be used to respect the Resource Network so that the final scheduling result gives SFG and FG Orders alignment with Pack and Mixer resources that are allowed.
Take the above example for Pack A. Even if the SFG can be made on all the mixers, if the demand comes from Pack A, then only Mixer A and D is allowed to supply the SFG.
Planning to min/max stock levels
For the scenario where SFG have dedicated storage, a useful technique is to plan to min/max allowed storage. Here, the PP/DS heuristic can respect min/max stock levels and the min/max stock levels can be represented on the detailed scheduling board stock projection charts as upper and lower boundary lines.
This method can be used to plan both SFG production as well as bulk raw material ingredients. The best way to model this is to use Continuous Distribution, so that the filling and emptying of the of the SFG is shown as a smooth transition on the stock projection charts.
Scheduling raw materials (bulk ingredients)
In standard SAP, scheduling production of FG and SFG can be done using resource charts on the scheduling board. If however, you wanted to schedule purchased materials, the resource chart is no use as purchasing planning objects will not normally consume production capacity. An option is available however using the product chart and an Olivehorse development. This development swaps the purchasing object for a planning object (planned order), which then allows the user to schedule the purchase order in APO and make use of the stock charts as shown above. This can be a useful technique for scheduling bulk ingredients such as oil, milk, sugar etc.
Bottom-up and top-down scheduling heuristics
To keep the FG and SFG schedules aligned and remove any infeasibilities in the schedule, there are 2 important standard heuristics which have been provided by SAP in APO PP/DS. These are called top-down and bottom-up heuristic which align the FG with SFG, or SFG with FG by keeping one of the levels as ‘fixed’ and planning the other level around it. This can run in finite or infinite mode and acts as an important tool in keeping the schedules aligned along with other tools.
Line balancing - grouping by common intermediates
Another technique developed by Olivehorse relates to line balancing. This is where multiple pack lines are constrained by a common SFG. This means that the pack lines must always pack the same SFG material. This can be achieved by using a combination of pooled capacity against the pack line and a development that updates the PP/DS Production Data Structure (PDS) in APO with a ratio of capacities across the PDS’s associated with the pack lines that ensures the common SFG is always being grouped.
Tank planning - container resources
Where storage needs to be modelled by a number of different Intermediates that can fill the storage, the PP/DS container planning solution may be an option. This is a standard SAP solution for managing tanks and involves defining the tank as a storage resource in APO, which is then linked directly to a storage location in ECC. You can model flow in and out of the storage resource, and during planning you can choose to empty the tank prior to filling with an alternative product.
Whilst technically this solution works and is fully integrated with PP/DS Optimisation algorithms, at Olivehorse we have found that the solution does have its challenges;
- When planning multiple pack lines, mix lines and tanks, the PP/DS scheduling board can become very overcrowded - so careful consideration of which objects to display is important.
- If you want to see the pegging relationship between FG and SFG, it has to also include the storage link - this could makes reporting very confusing.
- A mandatory condition is that the ECC storage location is linked to the storage resource, which means Inventory Management over Warehouse Management must be used to manage the SFG in ECC. To avoid creating too many storage resources, you may want to consolidate the number of containers to represent.
- This solution does not work for raw ingredients as you cannot fill the container with purchased materials
Here we have outlined some of the key benefits and challenges faced in industry when introducing SFG scheduling, and we have presented a few of the different options around how some of these challenges can be addressed.
In summary, for a successful implementation, only the critical constraints should be modelled - usability in a scheduling tool is key. The benefits in terms of improved adherence to schedule, allowing you to be flexible enough to make changes to the overall plan and improved accuracy on the raw materials planning will prove to be highly beneficial
Olivehorse specialise in solving complex SAP supply chain planning challenges - please contact us for more examples of best practise in PP/DS and how we can help.
I do hope this blog was helpful, please do share your views and click here for a full list of Olivehorse blogs.
Senior SCM Consultant, Olivehorse Consulting