SAP Sales and Operations Planning Tutorial
By this point you should have completed the first task of your SAP internship: the December 2007- November 2008 sales forecast. In this tutorial you will learn about SAP’s built in Sales and Operations Planning (SOP) tool. This planning tool will allow you to formulate a rough-cut production plan based on the sales data you have created. It is important to note that the rough-cut plan is just that, only a plan. When you create the plan you are not scheduling production in the system. SAP separates the action of planning from production scheduling to allow different plans to be created and analyzed before they are actually used in production. This process allows a company to run a few different plans to see which is best. Following the creation of the rough-cut plan you will learn how to transfer this data to the demand management function. Demand management is the link between the rough-cut plan and production scheduling. While SAP wanted companies to have the ability to check several different plans without actually scheduling production, it was still necessary to allow the rough-cut plan to be turned into a production schedule. Not only is this a very fast and easy way to create a production schedule based on the rough-cut plan, but it keeps the planning data secure from human data entry errors.
Part 1: Display Stock/Requirements List
Before we create our rough-cut sales and operations plan, let’s take a look at the current production for the SOS Beach Cruisers. This data is displayed on the stock/requirements list screen. The stock requirements list screen displays pretty much what the name implies; the stock level and future requirements for a material. Every material used in Beach Cruiser production has one of these screens. In the case of a finished good (BC-S, BC-LX) the requirements will be derived from production orders. If there is a production order for 50 BC-LXs, then a requirement of 50 will appear on the BC-LX stock/requirements page for that production date. In the case of raw materials and semi-finished materials used in the production of Beach Cruisers, the requirement is derived from the production order for the finished good and the bill of material (BOM) for that finished good. If a production order is created for 50 BC-LXs and the BOM for the BC-LX calls for 2 steering controllers (part BP-01), then the stock/requirements list screen for steering controllers will show a requirement of 100 for that production date. It is important to understand that the SAP system automatically determines the quantity of materials needed to build the number of finished goods listed in the production order. All the production scheduler needs to do is create the production order for the finished goods, and the system calculates the rest. To display the stock/requirements list for the BC-LX complete the following navigation.
From the SAP Easy Access User menu: Logistics è Production è MRP è Evaluations
Double click on Stock/Requirements list to access the initial screen. Enter BC-LX in the material box. Your plant should already appear in the Plant box. Click the enter button to display the stock/requirements list. As it stands right now, you should see that you have a stock of 20 Beach Cruisers model LX (Available qty). The rest of the screen should be empty, due to the fact that you have not created any planned orders or production orders for your plant. Now let’s start looking at the process of creating your rough-cut plan. Return to your SAP Easy Access User menu.
Part 2: Display Product Group
As mentioned in the introduction, the rough-cut plan is a tool used to determine the best way to schedule production. The rough-cut plan takes into account dates, projected sales, and inventory to produce the best possible production plan. Through the use of the SAP shared database structure, the rough-cut plan tool already knows how many production employees are available, how many hours these employees work, and how many workdays are available during the specific planning periods (in our case, number of workdays per month). As you will see, this makes creating a plan much easier, and accurate.
In SAP, the rough-cut plan can be formulated using two different methods. A plan can be formed to include a single product, or, the plan can be created using a predefined product group. Many companies, SOS included, manufacture and sell several closely related products. For this reason it usually becomes necessary to create a production plan using aggregate sales. For example, through marketing analysis, SOS has predicted that 80% of future Beach Cruiser sales will come from the S model, while 20% of sales will be derived from the LX model. Instead of completing two separate operations plans, one can be created. This is due to the fact that the company does not expect total Beach Cruiser demand to rise simply due to the introduction of the LX model. Instead, SOS expects 20% of those customers in the market for a Beach Cruiser to select the LX model over the S model. As the LX and S model Beach Cruisers share total consumer demand numbers, it makes sense to complete a single sales and operations plan. Instead of creating an aggregate plan, and then calculating how many of each individual Beach Cruiser model to produce, the SAP product group will automatically complete the calculation for you. Now let’s take a look at the SOS Beach Cruiser product group.
From the SAP Easy Access Menu: Logistics è Production è SOP è Product Group è Display
On the Display Product Group Initial Screen, enter BCPG (short for Beach Cruiser Product Group) in the Product group box. Your plant should already be filled in. Click the enter button to display the product group. As you can see, the Beach Cruiser product group consists of two products, the Beach Cruiser S and the Beach Cruiser LX. If you look at the Proportion Column, you will see that 20% of the product group will consist of the LX model, and 80% will consist of the S model. It is also important to note that the Aggr. fact (aggregation factor) is set at 1 for both products. This means that during the planning forecast, the system will schedule 2 LX models to be made every time 8 S models are scheduled. This may sound pretty basic, but what if we are running short of supplies and wanted to make sure we had enough materials to create 80 S models (since they sell better) before scheduling the creation of the 20 LX models? In this case, we could simply set the Aggr. fact to 80 for the Beach Cruiser S. The system would then complete the planning for 80 model S Beach Cruisers before scheduling the LX models (actually, if the LX Aggr. fact were left at 1, the system would schedule 1 LX and 80 S out of the first 81 cruisers scheduled, then schedule the remaining 19 LX models if enough supplies remain). By using this function, we could make sure that enough of either model is built to meet demand before the other model is scheduled. Return to your SAP Easy Access User menu.
Part 3: Creating the Rough-cut Plan
Now that you have examined the product group for SOS Beach Cruisers, it’s time to create the rough-cut plan.
From the SAP Easy Access Menu: Logistics è Production è SOP è Planning è For Product Group è Create
You should now be at the Create Plan: Initial Screen. Enter BCPG for Product Group. Your plant should already be filled in. Click the enter button. A Define Version box will appear on your screen. SAP allows for multiple plan versions to be created and saved. This allows several different plans to be created, which improves a company’s ability to quickly adjust production due to unforeseen circumstances in the future. You should see a three digit number in the Version box. Write this number down where you will not forget it, then click enter. Upon entering the Create Rough-Cut Plan screen, you will notice that the planning time frame begins with the current month. To help avoid potential user error due to attempting to schedule production in the past, the system will only allow scheduling to take place during the current or future periods. Examine the screen for a moment. Notice that there are areas for you to enter the projected sales, projected production, target stock level, and target day’s supply. We will be concentrating on the entries for sales and production. Notice that there are a few boxes grayed out. These are the fields which SAP will automatically calculate once you have entered your sales and production numbers. Before the sales and production numbers are entered, we must consider the impact of beginning inventory (called opening stock in SAP). As SAP is going to automatically calculate your stock level according to the sales and production numbers you insert, we have to enter the opening stock level in the system. Click on Goto on the menu at the top of the screen. Now select Opening stock level. Enter your beginning inventory of 100 in the Stock level box, and click the enter button. You should see your beginning inventory number displayed for each month in the Stock level row. So, how many LX models, and S models are currently in your inventory? It is important to remember that we are dealing with a product group on this screen. Your current inventory is comprised of 20% of the LX model and 80% of the S model. You therefore have 80 BC-S and 20 BC-LX in your inventory.
Now let’s start creating our rough-cut plan. Enter the number of beach cruisers you forecasted to sell for December 2007 in the sales row for that month. Enter the same number in the Production row for December 2007 (we only build what we expect to sell). Continue entering your sales forecast numbers in this manner for the rest of the months in your forecast. To advance ahead to any months which are not shown on the screen, use the Column right next… button at the bottom of the page (looks like a single black triangle pointing to the right). After you have entered your sales forecast numbers in the appropriate boxes, click the enter button. The system will automatically display your stock level as it changes due to production and sales. In addition, the system will tell you how many days worth of sales you have on hand (Day’s supply). To calculate this number, SAP determines the average daily sales from the numbers you entered, and divides the amount of stock you have on hand during that period. We will not be concentrating on day’s supply, but it is used in many organizations for planning, especially if the company is trying to build up a specific amount of supply based on historic sales data. After completing your rough-cut plan, click the save button at the top of the screen (looks like a small orange floppy disk).
Part 4: Transfer Rough-Cut Plan to Demand Management
As mentioned in the introduction to the Sales and Operations Planning Tutorial, the demand management function is the link between sales and operations planning and the actual production planning system. Assuming that the rough-cut plan you created is appropriate, SOS will decide to use the plan for scheduling production. To avoid the possibility of a production scheduler entering your production numbers incorrectly (can you imagine the problems an extra zero could cause?), SAP allows the plan data to be transferred to production scheduling automatically.
From the SAP Easy Access Menu: Logistics è Production è SOP è Planning è For Product Group è Transfer Product Group to Planning
The product group (enter bcpg if the box is empty), and plant should already be filled in. Click in the empty Version box, and enter your version number from Part 3 above. In the Transfer strategy and period, make sure Prod. Plan for mat. or PG members as proportion of PG is selected. This is telling the system that we want to create a production plan from our rough-cut plan data while taking the product group proportions into consideration. Make sure the Invisible transfer box is checked, and click the Transfer now button. You will probably see a yellow message flash across the bottom of the screen telling you that the plan version you are trying to transfer is not the current version. This is just a warning. Click the enter button to continue. After a moment, the sales and operations data will be transferred, and individual requirements (as opposed to product group requirements) for the Beach Cruisers will be created. Now let’s take a look at the effect of transferring the sales and operations data to demand management. Return to the SAP Easy Access User menu, and navigate to the stock/requirements list initial screen.
From the SAP Easy Access User menu: Logistics è Production è MRP è Evaluations è Stock/Requirements List
Just as you did in part 1, display the stock/requirements list for BC-LX. As you can see, independent requirements (IndReq) have been created. Look at the Rec./reqd. qty (received/required quantity) column for October. Notice that the number listed is 20% of the total aggregate production you entered on the sales and operations plan. At this point, no production plan has actually been created, only a requirement for the Beach Cruisers. To create the production plans, we need to run the material requirements planning function for the Beach Cruisers. Return to your SAP Easy Access User menu.
This concludes the SAP Sales and Operations Planning Tutorial
SOP MGT 301 1