thoughts from SAPPHIRENOW 2016

I had the pleasure again to visit SAPPHIRENOW again... not sure how many times I have been there yet, but the first one I attended was at the Embassy Suites in Orlando in 1992. 300 people were there... a stark contrast to the roughly 30,000 this year.

There was the usual show floor with all the partner exhibits, lots of presentations, all the ASUG seminars and keynotes from Bill McDermott and Steve Wozniak. But my personal highlight - as it is every year - was Hasso Plattner. He still has is, so I think, the driving force behind SAP and to a very large degree it is his genius that makes the SAP story an absolute awesome success.

HANA is his latest achievement and with it he is probably breaking any barrier there is. HANA has been around for a while but his speech made me finally understand what the possibilities are. They are enormous and I see an incredible amount of excitement for it. In a few years everybody will be running on HANA - first as a database for the suite of software available today, then on the new suite S/4 HANA.

It looks like a bright future for business software and there will be incredibly sophisticated apps and features running businesses more effectively and fast... if ! and that is still the crux of the matter: you fix the process first and use the tool as it was intended. Planners still have to understand how to move through the planning horizons and when to use rate based planning or takt-based scheduling... It won`t help you to move your production scheduling to S/4 HANA if you run your lines by access database clculations today or your buyers replenish with spreadsheet lists.

Fix and clean up your old ERP first and then use the cut-over transaction Hasso presented in his speech. It´s a fantastic way to go to HANA if you´re ready for it.

Hasso is ready and covered all the bases... did you?

Make To Stock Planning done right - are you doing it?

The topic of MTS versus MTO comes up often and people have their own opinions about the definition, but it's actually a very straight forward thing... isn't it? Let's review.

The definition that makes most sense to me goes as the following:

In a Make To Stock environment production is triggered BEFORE an actual sales order comes in and any receipt from the production line is put into inventory from where customer orders are fulfilled.

unfortunately, this does not make everything clear and concise. What if I get a customer order three months before I have to deliver to it? In that case you can enter the SO and it will show up in (SAP transaction) MD04. But we're still not producing to it when we're operating in MTS. It simply reduces the forecast that we produce to and gives us additional information about what we'll actually have to deliver, but it does not trigger production.

What if I get a large order today and do not have enough inventory to fulfill it? you'll have to wait until the next period produces enough product and tell the customer to wait. Because... what is produced this period is for customer orders requesting product in the next period. This is an important point to make... look at the following example:

in the graphical display of MD04 we can see that there is a forecast for the next five months. We can also see that the MRP Run has created orders to fulfill those forecasts. Not that MRP generates orders with their latest possible delivery date standing just before the forecast is due (it does assume unlimited capacity).

As we all know there is a another step necessary before we can start producing: the orders (standing all on top of each other at the latest delivery date) will have to be sequenced, leveled and scheduled into the previous period, so that we can build up inventory for next months' fulfillment of sales orders

This situation becomes visible in the next graphic. Orders were distributed and scheduled (according to the capacity situation) for the next two months. What is not displayed here is how the inventory is consumed by incoming sales orders. that is because we're looking into the future here and the system doesn't know how the sales orders come in (if you had sales orders in the system for the second months, it actually would be displayed by a red bar going down and the green line (inventory) going down as well)

Now what's really important here is that when all inventory forecasted for a period is exhausted and an additional sales order comes in (over and above what was forecasted), that sales order can only be fulfilled by safety stock or the customer will have to wait until the next period.

Do not change the production schedule to fulfill the order if the order is part of a Make To Stock strategy !

and this is where many processes and setups fail. A sales order for an MTS part triggers changes in the production schedule and the whole plan falls apart. Set a strategy periodically, know it and stick with it!

Do you know transaction MFS0? Do you perform mid-term planning?

As was discussed in another one of my blog posts, I deem it extremely important that the planning horizons are respected and specific activities are carried out in specific zones. Along those lines I'd like to refer to the mid-term planning horizon where one can execute stimulative MRP. SAP calls the simulative planning module LTP (Long Term Planning, which is a bit confusing as I would only use it for mid term planning).

With SAP-ERP's LTP you can create planning scenarios and attach different versions of a demand program to it. That way you're holding true to still only managing demand in the mid-term and once you find a fitting demand program, you can release it into operative MRP.

To plan these different versions of a demand program or forecast, a simulative MRP Run (the LTP Run with transaction MD02) is carried out and the result can be evaluated and planned in transaction MFS0. You probably never heard about about transaction MFS0 as it is hard to find any mention of it. But it is the mirror transaction to MF50 in operative MRP.

MF50 is often misunderstood and most people think it can only be used in conjunction with repetitive manufacturing. Nothing could be further away from the truth. MF50 is a tabular planning table, perfectly suited to balance supply with demand for any period you choose to look at. It can do so for detailed planning, rate-based planning (which makes it perfect to deal with in the mid term) and even sequencing. Additionally, there is a graphical planning screen available too (like in CM25)

As you are simulating in SAP-LTP you will find that everything is attached to a planning scenario (that's why you will find that object in MS04, MS07 (mirror transactions to MD04 and MD07) and many other LTP transactions. And when you look to plan as in MF50, the planning scenario with its associated demand version, it can be done with transaction MFS0.

Give it a try and have a look... MFS0 is the perfect planning transaction for rate-based, mid-term planning... but only if you use it in the context of an overall system of planning with planning horizons.