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PART I Materials Planning Basics
15
1 Materials Planning Basics
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1.1 The Process of Materials Planning
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1.2 The Materials Controller
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1.3 Strategic and Tactical Materials Planning
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1.3.1 The Role of a Strategic Materials Planner
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1.3.2 The Tasks of a Tactical Materials Planner
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1.4 Portfolio Segmentation for Decision Making
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1.4.1 Portfolio Management Example
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1.4.2 Strategies in an Enterprise
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1.4.3 Segmentation for Replenishment Strategies
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1.5 Lean and Agile Supply Chains
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1.5.1 Pushing, Pulling, or Both?
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1.5.2 A Lean Supply Chain Flows
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1.5.3 An Agile Supply Chain Flows, Too
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2 The Past and the Future of Materials Planning
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2.1 Past Problems with Materials Requirements Planning
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2.2 Today’s Problems with Material Requirements Planning
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2.3 A Word on Customizing
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2.4 The Old Paradigm and the New
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2.4.1 Using SAP ERP as a Control Mechanism
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2.4.2 Using SAP APO as a Planning Instrument
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2.4.3 Combining SAP ERP with SAP APO Successfully and Efficiently
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2.5 Future Potential in Operations, Supply Chain, and Materials Management
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2.5.1 The Science of Operations Management
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2.6 Planning the Future with an Unconstrained Supply Plan
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2.6.1 Shaping a Better Future Using the Right Side of Our Brain a Bit More Often
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3 Building Blocks of Materials Planning
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3.1.1 Demand and Supply Profiles
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3.1.3 Strategies to Connect Sales with Production
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3.2 Strategic and Tactical Materials Planning
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3.2.1 Organizational Considerations
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3.2.2 Designing Standard Processes for Strategic and Tactical Materials Planning
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3.3 Scientific Theories and Global Integration
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3.3.1 Systems Thinking
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3.3.2 Factory Physics and Supply Chain Science
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3.3.3 SAP Value Stream Mapping and Lean Dynamics
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PART II Materials Planning in SAP ERP
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4 Principles of Effective Materials Planning
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4.1 Supply Chain Strategy and Performance Boundaries
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4.1.1 Establishing a Solid Framework of Reference
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4.1.2 Leadership Roles
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4.1.3 Set Goals and Measure Results
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4.1.4 Materials Portfolio Segmentation
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4.1.5 Performance Boundaries Examples
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4.2 Developing User Guidelines and a Policy Playbook
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4.3 Setting Control Limits
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4.4 The Competent Materials Controller
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4.4.1 Overall Setting of Strategy and Periodic Fine-Tuning of Policy
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4.4.2 Tools for Decision Making
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4.4.3 The SAP Add-On Tools
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5 Prioritized Portfolio Management
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5.1 Portfolio Basics in SAP
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5.1.2 Groupings and Priorities
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5.2 Responsibilities and Accountability
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5.2.1 Outdated Elements
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5.2.2 Housecleaning Materials Portfolios
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5.4 Monitoring Your Portfolio
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5.4.1 Transaction MD07 Setup
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5.4.2 Portfolio Management with the MRP Monitor
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6 Automated and Periodic Policy Setting
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6.1 Employing Strategies and Policies in an Enterprise
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6.2 Segmenting a Materials Portfolio
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6.2.1 Performing an ABC Analysis
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6.2.2 Determining a Coefficient of Variation for the XYZ Analysis
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6.2.3 Combining ABC with XYZ
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6.2.4 Adding an EFG Classification for Long and Short Lead Times
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6.2.5 UVW Classification for Purchase Price Segmentation
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6.2.6 LMN Classification for Volume or Size
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6.2.7 Lifecycle Analysis
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6.2.8 Putting It All Together for Policy Setting
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6.3 Replenishment Policies
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6.3.2 Lot-Sizing Procedures
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6.3.3 Safety Stock Strategies
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6.3.4 Developing a Playbook for Replenishment Policies
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6.4 Planning Policies
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6.4.1 Forecast and Order-Based Fulfillment Practices
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6.4.2 Strategy Groups and Strategy
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6.4.3 Availability Check and Transfer of Demand
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6.4.4 Consumption Procedures
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6.4.5 Developing a Playbook for Planning Policies
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6.6 Using the SAP Add-On Tools for Segmentation and Policy Setting
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6.6.2 Safety Stock and Reorder Point Simulator
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6.6.3 Lot Size Simulator
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7 Intelligent Exception Monitoring
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7.1 Exception Monitoring in SAP ERP
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7.1.1 Exception Groups and Exception Messages
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7.1.2 Prioritization of Exception Groups and Exception Messages
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7.1.3 Fixing the Root Cause Instead of Expediting the Problem
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7.2 Building a Monitoring System for Exceptional Situations
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7.2.1 How to Initiate the MRP Run
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7.2.2 Exception Cards
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7.2.3 Monitoring Exception Messages
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7.2.4 Putting It All Together
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7.3 Using the SAP Add-On Tool MRP Exception Monitor
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8 Sustainable Inventory Optimization
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8.1 Performing Inventory Analysis
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8.1.1 SAP ERP’s Logistics Information System
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8.1.2 Analyzing and Monitoring Stocks with Document Evaluations
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8.2 Employing Inventory Strategies with Meaningful Key Performance Indicators
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8.2.1 Strategic and Tactical Inventory Key Performance Indicators
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8.2.2 Parameter Controlling with Dual Classification
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8.3 Making Inventory Optimization Sustainable
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8.3.1 Fine-Tuning the Policy
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8.3.2 Performing Daily Exception Monitoring for Continuous Attainment of Good Results
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8.3.3 Keeping the Basic Data and Supply and Demand Elements Clean
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8.3.4 Getting Management to Sign Off on Meaningful Supply Chain Strategies
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8.3.5 Performing Capacity Sequencing, Leveling, and Scheduling
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8.3.6 Respecting the Planning Horizons
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8.4 SAP Add-On Tools for Inventory Optimization
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8.4.1 Analyzing Stocks with the Inventory Cockpit
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8.4.2 Simulating Lot-Size Procedures, Safety Stock Levels, and Reorder Points
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8.4.3 Simulating the Effects of a Policy
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PART III Evaluating, Measuring, and Improving Materials Planning
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9 Key Performance and Supply Chain Indicators
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9.1 The Balanced Scorecard
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9.2 The Supply Chain Performance Index Framework
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9.2.1 The Supply Chain Performance Index Spider Graph
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9.2.2 Inventory Performance
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9.2.4 Automation/Integration
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9.2.5 Flexibility/Agility/Responsiveness
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9.2.7 Cost/Profitability
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9.2.8 Visibility/Transparency/Communication
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9.2.9 Information Maturity
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9.2.11 Organizational Support
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9.3 Putting It All Together
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9.4 SAP Add-On Tools for Performance Measurement
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9.4.1 Service Level Monitor
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9.4.2 Supply Chain Performance Cockpit
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10 Traditional Inefficiencies
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10.1 Dealing with an Unmanageable Amount of Exception Messages
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10.1.1 Using Exception Messages
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10.1.2 Using the Right Transaction Codes
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10.1.3 Lack of Good Policy
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10.2 An Isolated Sales Department
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10.2.1 Possible Sales Interface Mental Model 1: Not Fixing the Date in the Delivery Proposal of the Sales Availability Check
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10.2.2 Possible Sales Interface Mental Model 2: Forecast Reduction
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10.2.3 Possible Sales Interface Mental Model 3: The Make-to-Stock/Make-to-Order Decision
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10.2.4 Possible Sales Order Interface Mental Model 4: Checking With or Without Replenishment Lead Time
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10.3 A Buyer without a Cause
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10.4 Fiddling with Policy
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10.5 Capacity Planning
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10.6 Using Sales Orders for Intercompany Stock Transfers
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10.8 Hiding the Buffer
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10.9 The Reorder Point Dilemma When Sourcing from Another Plant
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10.10 The Hang-from-the-Ceiling Strategy
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11 Improvement and Optimization Programs
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11.1 Benchmarking the Current State
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11.1.1 Inventory Performance
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11.1.3 Automation and Integration
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11.1.4 Flexibility and Responsiveness
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11.1.5 Transparency, Visibility, Communication
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11.1.6 Measuring Information Maturity
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11.1.8 Organizational Support
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11.2 Developing Improvement Initiatives
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11.3 Measuring Progress
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PART IV Modeling Materials Planning
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12 Scientific Modeling of the SAP Supply Chain
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12.1 Operations Management and Science
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12.1.1 Science and Technology in Operations Management
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12.2 Systems Thinking
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12.2.1 Causal Loop Diagrams
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12.2.2 Stock and Flow Diagrams
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12.2.3 Behavior-over-Time Diagrams
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12.2.4 Mental Models in Materials Planning and How to Break Them
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12.3.1 Operations Science within a Framework of Demand and Transformation
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12.3.2 Performance Boundaries
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12.3.3 Management Control
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12.3.4 Some Basic Factory Physics Principles
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12.4 SAP Value Stream Mapping
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13 Examples from Industry
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13.1 Continuous and Sustainable Optimization at Tennant Company
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13.2 Plant Transformation at ASEA Brown Boveri
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13.3 A Model for the Process Industry from Bellisio Foods
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13.4 Lean Materials Planning with SAP at Kraft Foods
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14 Conclusion and Outlook
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