This article has been specially written for Supply Chain Managers and Planning Managers whose company runs S4.
How to operate Supply Chain Planning in S4? What a bizarre question! Of course, each and every SAP customer can operate Supply Chain Planning in S4!
However, Supply Chain Planning has a different meaning in everyone’s thinking.
- Should you be an industrial company producing goods, your Supply Chain Planning solution is likely made of S4 PP or PP-PI. This is the case since SAP R2. The SAP solution covers quite well the requirement to operate and optimize production. Even better, a couple of years ago, SAP launched e/PPDS as an internal part of S4, smoothly integrated into PP. Obviously, there is an additional cost to it. I will write another article on this soon.
- Should you be a trading company, S4 MM and S4 SD will likely match your Supply Chain Planning solution requirements. Since always, these modules support execution and planning functions for your buying and selling processes.
- Imagine now you are a producing company that also sells goods over a Supply Chain network as illustrated in the picture below. In such a case, your Supply Chain Planning includes production planning, procurement planning, and distribution planning. You are beyond the limits of S4 capabilities, particularly for the distribution aspects of your Supply Chain. This is why SAP since 1990 supported this tricky distribution process through LIS, then APO (1998), and since 2015 with IBP software. The point is, you may not be able to afford IBP because of pricing or implement it within a single week. You need to engage in a digital transformation to adopt IBP, and of course, get one of the best-of-breed supporting tools.
Let’s imagine we are case three, you cannot go for IBP because of any of those sensible reasons, nor for other competitor software. This is the case with most of the hundreds of thousands of SAP ECC and S4 customers with probably a turnover below 300 mEUR. Here, customers usually implement S4 base modules like MM, PP, SD, FICO, possibly adopt a reporting extension like SAC and then design their solution with limited access to consultancy as this is quite an expensive investment.
Don’t get me wrong here, this is definitely not a criticism against those companies, only a fact I observed over the last 30 years of Supply Chain consulting. My aim has always been: How can we make it an acceptable way for my customer despite constraints?
Let’s summarize what has been said so far. Here is a company that has S4 MM, SD, PP, and SAC, with requirements regarding production, procurement, and selling already covered by the S4 standard, wishing to extend to distribution planning to optimize inventory positions and improve customer service level without going towards an Advanced Planning solution. Last but not least, there is not much time to implement the new solution.
To perform distribution planning, the ERP must first allow modeling of the Supply Chain Network sourcing policy (see the backward green arrows in the picture shown above). This is the case with S4 already, although this is not visible. You can define your sourcing rules using a “Special Procurement Key” defined at SKU level (Material-Plant, MM02 In view MRP2), as well as through Procurement Info Records (PIRs), and finally with Quota Management in MM/PP. Nothing fancy, but it works.
We also need to know the company’s demand signal, in other words, the Consensus Demand Plan (CDP). This is not the focus of this article, but we just need it urgently. Here, there are various ways of creating a CDP, including, in the end, posting it every month in MD61 and MD62 transactions as PIRs (Planned Independent Requirements).
From that point, you need to run the planning tool in the correct sequence to respect the upstream data propagation (green arrows), starting from the demand node (DC for instance) towards the sourcing nodes, from right to left in the picture. When hitting a factory, the propagation of the demand goes down the bill of materials (BOMs) and continues flowing to the left toward the sourcing supplier.
This particular capability to progress along the network has recently been added to S4 with the MRP Live, although not all customers run it. By selecting several location/products, the MRP Live now sorts the SKUs in the right order. In other words, if you run the MRP you need to take care of running sequentially the MRP node by node going upward, from right to left, product by product according to low-level code (depth in BOMs) from top to bottom.
You can imagine here the serious complexity of scheduling your MRP calculation jobs. You can also assess that Supply Chain decisions like changing sourcing policies, or producing products in different plants imply deep changes for your MRP calculation job sequence!!
I developed, some time ago, for a very big food company a special program, the so-called SCM Job Launcher. It allows running any SAP program, like MRP for instance, in the sequence of the Supply Chain network, going upward or downward according to a parameter, selecting business objects with a fully flexible selection criteria concept that automatically adapts to the Supply Chain changes. In addition, technically the program also manages the parallelization of calculations to optimize runtime and provides an advanced application log by material and plant to check results.
Take the example of going upward in the Supply Chain. Let’s create an SCM Job Launcher job to run MRP over the European network only, going upward, only for chocolate products defined in the product hierarchy, restricted to products being produced in Switzerland only. To do so, you define only one single job in the SCM Job Launcher. That’s all! The Business decides to change sourcing rules or adopt a new product, etc. – no need to change the job.
Another example: Your company, unfortunately, does not use Stock Transport Orders, called the STO scenario, to manage the interplant flow. Instead, your S4 solution uses Sales Orders (SO) associated with Purchase Orders (PO), a so-called SO/PO scenario to manage distribution planning (DRP). At the end of the planning cycle, you wish to propagate feasibility from source to destination so that your receivers are aware of future feasible replenishments, not only unconstrained MRP promises.
To do so you may need to run in sequence, going downward, left to right as illustrated by the red arrows in the picture, the backorder processing (BOP) program against your sales orders (SO part of SO/PO). Here again, a single SCM Job Launcher job can do it, triggering the BOP for selected plants and products according to a flexible selection.
Technically speaking, the SCM Job Launcher, based on flexible selection criteria and network direction, will dynamically create many child jobs, in the right sequence, parallelize them if possible, collect standard logs in its own log, and monitor the child job execution.
Thanks to the SCM Job Launcher, the customer mentioned above, went from 27 to only 2,5 hours of calculation time, from hundreds of jobs to one job, from a constantly changing setup requiring one FTE to maintain jobs to an auto-adaptive setup. At that time, the customer’s users in South America thought my name was a computer’s name 😊.
You may have designed a similar program, however, if not, get in touch with us!