SAP Advanced Planning and Optimization (SAP APO)

SAP Advanced Planning and Optimization (SAP APO) is the planning component that, together with SAP Event Management (SAP EM) 4.0 and SAP Inventory Collaboration Hub (SAP ICH) 4.0, makes up the SAP SCM 4.0 solution.

SAP Advanced Planning and Optimization (SAP APO)

Supply Chain Planning

SAP APO is a robust tool designed to enable your organization to achieve the inconsistency between aspects or parts of a whole goal of improving customer service while reducing costs. By enabling visibility for and access to all stakeholders involved in generating a single, organization wide demand plan, the demand planning capability of SAP APO projects the needs of your organization’s customers.

Those needs, combined with the capacities of your organization’s capital assets and existing inventories, are then used as inputs for supply network planning, which converts them into a feasible plan for production, warehousing, and transportation. This plan accurately balances material, labor, and equipment constraints with the anticipated customer demand.

Together, demand planning and supply network planning can support your organization’s entire sales and operations planning process. The detailed, tactical decision support capabilities, which help turn the plan into reality, are also handled by components of SAP APO, such as production planning and detailed scheduling. It insures each of the production assets is loaded to achieve maximum efficiency for the production line and facility. The best use of fleet assets is determined through transportation planning and vehicle scheduling. Finally, global available-to promise (GATP) allows your company to get products to your customers as soon as possible, helping you meet customer demand that exceeds current inventory positions.

Supply Chain Execution

From the moment a shipment to a customer leaves your organization’s shipping docks, transactional data is being gathered through the use of enterprise requirements planning solutions, such as mySAP ERP. This information, whether it is about inventories, open customer orders, new product specifications, existing production schedules, or numerous other details, is fed into SAP APO to support ongoing planning. The combination of SAP’s real-time Core Interface Functionality (CIF) and liveCache planning model allows for continuous planning updates of this transactional and master data throughout the day.

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Supply Chain Coordination


External information, such as the status of a purchase order in a supplier’s manufacturing process or the expected delivery of a key inbound shipment of raw materials, is also being continuously imported into the system. Using tools like SAP Event Management, updates to plans can be triggered by key events, such as a supplier’s production lot passing final quality inspection.

While event management tools monitor critical pieces of the supply chain puzzle, other tools, such as SAP Inventory Collaboration Hub, gather inventory data across the entire supplier base. Looking forward in the supply chain, demand and inventory from a customer, or even a customer’s customer, is brought into the mix.

Supply Chain Collaboration

With such a clear and precise picture of the state of the entire supply chain at your disposal, it is possible to move from “what is” to “what might be” for both suppliers and customers. Using out-of-the-box Web collaboration capabilities, SAP APO enables organizations to share demand and promotional plans in real time with customers, any of whom may view, comment on, or even edit the plan.

SAP APO supports intercompany collaborative processes, such as vendor-managed inventory (VMI) and the Voluntary Inter-industry Commerce Standards Collaborative Planning, Forecasting, and Replenishment process (VICS CPFR), and it has been certified by the Uniform Code Council as being interoperable with other vendors.

Also See: SAP MM Simple Procurement Cycle

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