SAP S&OP on HANA and the Supply Chain Modeling

S&OP on HANA comes with a built-in ability of aggregating data on the fly once the data have been provided at a fine granular level. One would store data in S&OP at location product/week or month and then planning on Product Family/Region/Quarter and Year, providing that the Master data contains the required dimensions to categorize product and location.

S&OP supports different type of calculations (see previous post), but for performing supply chain specific calculations, SAP developed the Supply Chain Planning operator. This algorithm analyzes on the fly the master data and performs several calculations over the network of location-products. The current algorithm provides Heuristic (rule-based) calculations in an unconstrained or constrained fashion.

In both variations the operator propagates the customer demand (at finished good level) in the network according to given sourcing ratios (same of quota). The dependent demand is then broken into the components of the Bill of Material (BOM) configuration and the component demand is then propagated back in the supply chain. BOM "explosions" can be performed recursively in the chain depending on the configuration. 

The supply model supports unconstrained or constrained algorithms. The finite planning (constrained) algorithm models resources at transportation and production separately and stock transfer orders support lead time constraints. This algorithm also includes minimum lot size for production and transportation separately.

Flipchart used in recent workshop

Flipchart used in recent workshop

Cost propagation over the network (from the raw material price to the finished good ordered by the customer) is not part of the current release and I have not heard is part of the current roadmap. Therefore an Integrated Business Planning (IBP) scenario would have to develop this part of the model using the calc engine functionality of S&OP. Many current customers have already adopted it or are planning to introduce it soon. From the logical perspective what customers are interested in is to improve the accuracy of the approximation introduced by the Rough Cut plan and aggregate the data simulated at finer granularity so that corporate key performance indicators can be compared with the result of a bottom up approach. A tool like S&OP on HANA provides an accurate planning SCM model so that different contingencies and strategies can be simulated and compared with a very high degree of accuracy. 

In a following posts I will touch what is needed to configure an S&OP model of this type from scratch.