SAP Advanced Planning and Optimization -- or APO -- is one of the critical pieces of SAP Supply Chain Management....
One of the first things to know for an SAP APO overview is that it is a component of SAP Business Suite. Implementing SAP APO complements the SAP ERP Central Component (ECC) logistics and supply chain processes, such as procurement, production and sales.
Apart from its own planning data, SAP APO uses data from ECC for in-depth and comprehensive materials, capacity, procurement and logistics planning. Once complete, the planning data from APO flows back into ECC for execution and monitoring. Data transfer between APO and ECC takes place through the Core Interface (CIF).
Knowing the features and functionality of SAP's APO core components enables CIOs to decide on the components that will best meet the business's needs. This information also helps in estimating the cost, time and effort involved in implementing relevant APO components.
As part of this APO overview, here are the core components of SAP APO and what they do.
The Demand Planning (SAP APO-DP) component is an advanced forecasting, demand sensing and planning tool to capture changes in demand signals and patterns as early as possible to adjust the entire supply chain accordingly. The DP component improves sales and operations planning when it integrates with the Supply Network Planning component of APO.
Supply Network Planning
The Supply Network Planning (SAP APO-SNP) component optimizes procurement, production, distribution and transportation of materials by creating practical and feasible plans in a complex, globalized supply network environment. The Capable-to-Match functionality of SNP simulates constraint-based supply chain models to come up with optimal and cost-effective production, transportation and various other plans that meet or exceed predefined service levels.
Production Planning and Detailed Scheduling
The Production Planning and Detailed Scheduling (SAP APO-PP/DS) component improves short-term manufacturing plans by taking into account the availability and constraints of materials and critical resources to propose optimum sequencing and scheduling of products to produce or materials to procure. For example, SAP ERP Capacity Requirements Planning (CRP) assumes the availability of unlimited resource capacity, which really isn't possible, nor practical. Production plans created in SAP-APO-PP/DS for critical products take the resources and constraints into account to come up with optimized production and procurement plans.
The Global Available-to-Promise (SAP APO-GATP) component improves the supply chain order fulfilment business process. It links capacity and material availability to customer orders to plan and compute if the delivery dates requested by customers can be met or not, thereby helping a company maintain its service level.
Transportation Planning/Vehicle Scheduling
The Transportation Planning/Vehicle Scheduling (SAP APO-TP/VS) component enhances transportation planning by taking into consideration the capacity of transportation modes, such as trucks and trailers. It also optimizes route planning to ensure a reduction in transportation time and costs.
Companies generally opt for implementing APO on a separate system to divide the planning functions of APO with the execution functions of ECC.
However, effective from SAP Supply Chain Management 7.0, Enhancement Pack 3, it is possible to install APO on the ECC system as an add-on. The CIF still remains the mode of communication between APO and ECC, even when both applications are on the same server.
Additionally, companies planning to implement or migrate to S/4HANA will find that the PP/DS component of APO is already native to S/4HANA, thereby further reducing the time, effort and cost involved.
You can see from this SAP APO overview that this tool is meant to truly enable better supply chain management.
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