SIOP (Sales Inventory & Operational Planning)
SIOP Process Flow
Individual Forecast
(MB30)
Total Forecast
(MP38)
Material
Forecast
Production
Order
MRP
Demand
Management
Stock
Requirement
List (MD04)
MRP run (MD02
SOP/Flexible
Planning
Purchase Order
PIR (MD61/
MD62
Conception based
planning/ Make to
order
Info- Structure (MC21)
Planning type (MC8A)
Planning Hierarchy (MC84)
Resources (CR01)
Rough Cut Planning Profile
(MC35)
Transfer to Demand
Management- MC75
The Forecasting, Production Planning and Procurement Planning enterprise process area
includes the business processes for sales quantity planning and demand management
planning. It is positioned in front of the business areas Production and Procurement and
provides these areas with the necessary information about quantities and scheduling for
the products to be produced or procured.
The entire planning process is run within this area, starting from the medium to long-term
sales and production operation planning, across demand management and MPS right up
to detailed MRP. Finally the result of this planning process is planned orders, which
determine which material has to be produced/procured in which quantity and on which
date, so as to cover the customer and stock requirements that occur. These planned orders
are then converted into concrete production orders, process orders or run schedule
quantities in Production. In Procurement the planned orders are changed into purchase
requisitions.
In the areas of Production and Procurement processes for evaluating and processing the
capacity situation are also used.
Forecasting:
Standard methods in ECC to arrive at planned independent Requirements through a
forecast are Material Forecasting (which creates forecasts based on historical
consumption) and Sales and Operations Planning (which can forecast based on anything
you design).
Simplest to implement is material forecasting. For most companies, FGs consumption
data is more than adequate to provide realistic forecasts.
Once your forecast is done, using either Material forecasting or SOP, it can automatically
be converted to Planned Independent requirements.
In order to carry out the forecast for a material, you must first of all maintain the forecast
parameters for this material in the material master record.
Forecasting Models:
When a series of consumption values is analyzed, certain patterns can usually be
detected. From these patterns it is then possible to differentiate between various forecast
models:

A constant consumption flow applies if consumption values vary very little from a
stable mean value.
 With a trend model, consumption values fall or rise constantly over a long period
of time with only occasional deviations.
 If periodically recurring peak or low values which differ significantly from a
stable mean value are observed, it is a case of a seasonal consumption flow.
 A seasonal trend consumption model is characterized by a continual increase or
decrease of the mean value.
If none of the above patterns can be detected in a series of past consumption values, then
we have an irregular consumption flow.
Forecast Parameters:
Parameters on the forecast screen in the material master record can be predefined using a
forecast profile. Forecast profile allows the user to create a default that copies the
parameter values directly into the material master record.
Create Forecast Profile (MP80):
In a forecast profile you define



Which fields are filled with values when forecast data is entered in the material
master record.
Which values these fields have.
Which of these values can be overwritten and which cannot.
USE:
The information stored in a profile is standard information that is needed in a similar
combination again and again for the maintenance of material master records. It facilitates
data entry and data management.
Model Selection:
Before the first forecast can be carried out, you must specify which forecast model the
system is to use to calculate the forecast values.
There are three basic possibilities:



Manual Model Selection
Automatic Model Selection
Manual Model Selection with Additional System Check
Model Initialization:
Model initialization is the process of specifying the necessary model parameters, such as
the basic value, the trend value and the seasonal indices for the selected forecast model.
In each case, initialization occurs during the first forecast for a material. It must also be
carried out in cases of structural interruption, that is, if the existing forecast becomes
invalid.
Model parameters are necessary for which forecast models are shown in the following
table:
Model Parameters
Model
Constant model
Trend model
Seasonal model
Seasonal trend model
Model parameters
basic value
basic value, trend value
basic value, seasonal indices
basic value, trend value, seasonal indices
The forecast model is usually automatically initialized. In order to do this, the system
requires a certain amount of historical values. The number required varies depending on
the forecast model as shown in the table below.
Number of Historical Values Required for Model Initialization
Model
Constant model
Trend model
Seasonal model
Seasonal trend model
2nd-order exp. smoothing
Moving average
Weighted moving average
No. of historical values
1
3
1 season
1 season + 3
3
1
1
The system calculates the basic value on the basis of an average value, and the trend
using the results of the regression analysis. The seasonal indices result from the quotient
of the actual past value and the basic value which has been adjusted for the trend value.
These calculation methods are used for the constant, trend, seasonal and seasonal trend
models, depending on which parameters are to be determined.
For the second-order exponential smoothing model, a regression analysis is carried out.
For the moving average and the weighted moving average models, the system calculates
an average value.
Parameters for Forecast Model:
Historical Periods:
The number of historical periods entered into this field is use to calculate the forecast. If
this field is left blank no periods will be used in the profile.
Forecast Periods:
Number entered in this field is the number of periods over which forecast will be
calculated.
Number of Periods for Initialization:
This number is for historical values that the user wished to be used for the forecast
initialization. If this field is left blank no periods will be used in the profile.
Fixed Periods:
The fixed period field is used to in order to avoid fluctuations in the forecast calculations
or because production can no longer react to changed planning figures. The forecast will
be fixed for the number of periods entered in this field.
Number of Periods per Seasonal Cycle:
If your client uses seasonal forecast model then this field can be used to define number of
periods that makes up a season for this material.
Initialization Indicator:
If the forecast needs to be initialized then this indicator can be set to allow system to
initialize the forecast. It also allows manual initialization.
Tracking Limit:
The tracking limit is the value that specifies the amount by which forecast value may
deviate from actual value.
Pre-requisite to carry out the Forecast:

You must have maintained the forecast parameters in the article master.

You must have determined the period for which the system is to carry out the
forecast. You do this by defining the period indicator in the article master. For
each article, the forecast can be carried out on either a daily, weekly, or monthly
basis, or alternatively, according to accounting period.

You must already have determined how the system is to select the forecast model.
This can either be done manually by the RP controller or automatically by the
system. In the case of automatic model selection, you must make sure that the
required numbers of historical values are available; the number required varies
depending on the forecast model selected.

If no historical values were entered when creating the article master, you must
carry out manual model initialization.
On the other hand, you can reduce the number of periods to be taken into consideration
by limiting the number of historical values in the article master. This means that not all of
the historical values are used for the forecast, and instead, only the number of values that
you enter.
Forecast Options:
Individual Forecast (MP30):
Carrying out the forecast for a particular article in a particular site is known as the
individual forecast.
Total Forecast (MP38):
If you want to carry out the forecast for all the articles in one certain site or in all sites,
then you must carry out a total forecast.
Total Forecast in Background Mode (MPBT):
Here, you can either start the forecast run immediately or you can plan it to start at a later
date by means of a selection variant. The forecast is then carried out in background mode.
Forecast Result:
After a forecast run, the results must be checked over to make sure that the forecast was
carried out correctly. There are two ways of doing this:

Checking the Forecast Result Using a List
You can print a list of the materials which were included in the forecast via a print
program and then you can use this list to check the results.

Checking the Forecast Result in Online Mode
Alternatively, you can check for incorrect forecast results online.
SOP:
SOP Data Process
Create Sales Plan
Create Production Plan
Aggregate Plan & Check Capacity
Transfer Planning Values to
Demand Management
Pre-requisite:
1) Information Structure
The Sales & Operations Planning (SOP) application is based on information structures.
An information structure is a statistics file containing operational data. This can be either
planning data you anticipate will happen or actual data that happened. An information
structure contains three kinds of information: characteristics, key figures, and a period
unit. Information structures are used for data evaluation, projection, and analysis in all the
logistics information systems.
a) Characteristic (i.e. MRP Controller, Plant, Planning Plant)
b) Key figures (i.e. Sales, Production, Stock level, targeted stock level, etc.)
2) Master data
a) Product group
A Product group combines other product groups and materials according to whatever
criteria best needs of the enterprise. It is classified according to wether they are multi
level or single level. A product group is multi level if it contains other product
groups. However, the lowest level in product group hierarchy always consists of
materials.
b) Planning Type
It acts as a template to maintain data for specific Information structure. It is a
customize view of Planning table. We may have one view for sales planner and other
view for production planner. There is no restriction on number of planning type per
Info-structure.
c) Planning Hierarchy
It is a combination of characteristic value. It provides frame work for flexible
planning.
d) Work center
Machine is normally referred as Work-center in SAP. It is the place where
conversion of work takes place. Used in Rough-cut profile.
e) Rough Cut Planning Profile
Rough cut planning profiles are used in Work-center leveling. They are designed to
give us an aggregate view of work-centers.
Types of SOP:
1. Standard Sales & Operational Planning
2. Flexible Planning
Standard SOP
In Standard SOP, work with one organizational unit and plan predefined key figures in a
planning table with set layout. All Plans in Standard SOP are based on Standard
Information structure S076.
Flexible Planning
It can be based on any information structure, either self defined information structure or
standard information structure.
Planning Method:
Very importance in SOP is Planning method applied to the Information structure. The
planning methods determine how data is distributed to different corporate units. (Based
on business demand we can customize parameters for Info-structure and key figures).
i)
Consistent planning
Data is stored in the most detailed level of the planning hierarchy. Planning levels are
interdependent: changes made at one planning level immediately affect all other
planning levels. The system performs aggregation and desegregations at runtime.
Planning is based on a self-defined information structure. You can access planning
data from any level. Your view on the planning table is non-hierarchical: you plan
one or more characteristic value combinations.
ii)
Level by level planning
Data is stored at all planning levels. You can plan each planning level separately.
Planning levels are independent of each other; plans at different levels need not
necessarily be consistent. Both top-down and bottom-up planning are possible.
Standard SOP Process uses Level by level planning in Info-structure S076.
iii)
Delta planning
Data entered at one level is aggregated automatically to higher levels at runtime.
Changes made at one level are not automatically disaggregated. The difference
remains between the sum of the individual values at the lower level and the total
shown at the higher level.
Function
Consistent
Level-By-level
Delta
Automatic aggregation
Automatic
disaggregation based on
factors saved in
database.
Automatic time
dependent
disaggregation based on
previous planning data.
Create Planning
hierarchy
Forecast
Yes
Yes
No
No
Yes
No
Yes
No
No
Yes
Yes
Not required
Yes
Yes
Resource leveling
Background processing
Fix key figure values in
planning table
Long texts for versions
and periods in planning
table.
Standard analysis for
info structure
Transfer to demand
management
Yes
Yes
Yes
Yes
Yes
No
Yes (but not possible to
save different forecast
versions.)
No
No
No
Yes
Yes
No
Yes
No
No
Yes
Yes
No
SOP Master Data Creation:
1)
2)
3)
4)
5)
6)
Create Info-structure (MC21) (S501-S999)
Create Planning type (MC8A)
Create Planning Hierarchy (MC61)
Create Product Group (MC84)
Create Resource (CR01/CR02)
Create Rough Cut Planning Profile (MC35)
Standard SOP Prcoess
Create Plan in Inactive version
(MC81)
Disaggregate Product group plan
and check Capacity utilization
(MC76)
Convert Inactive version to Active
version (MC78)
Transfer Product group Plan to
Demand Management (MC75)
Step by Step Procedure for Standard SOP:
1)
2)
3)
4)
Create Plan in Inactive version (MC81).
Disaggregate Product group plan and check Capacity utilization (MC76).
Convert Inactive version to Active version (MC78).
Transfer Product group Plan to Demand Management (MC75).
Flexible Planning Process
Create Plan in Inactive version
(MC93)
Convert Inactive version to
Active version (MC8V)
Transfer Plan to Demand
Management (MD62/MC90)
Step by Step Procedure for Flexible Planning:
1) Create Plan in Inactive version (MC93).
2) Convert Inactive version to Active version (MC8V).
3) Transfer Plan to Demand Management (MD62/MC90).
Demand Management – MD61 / MD62
The quantities determined in SOP or Forcasting is transferred as independent
requirements to Demand Management. If the rough plan was based on a product group,
the planned quantities are divided into the individual materials according to their
proportional factor. In Demand Management, the requirements from incoming sales
orders are accounted for as individual customer requirements. Depending on the planning
strategy, these are then settled against the existing planned independent requirements.
The result of Demand Management is the demand program.
MRP Planning (MD04/ MD02/MD05)
The function of material requirements planning is to guarantee material availability that is
used to procure or produce the requirement quantities on time both for internal purposes
and for sales and distribution. This process involves the monitoring of stocks and, in
particular, the creation of procurement proposals for purchasing and production Stock
Requirement List.
The following pre-planning strategies are available in this scenario (selection):
_ Planning final products with final assembly
_ Planning with final assembly (40)
_ Net requirements planning (10)
_ Gross requirements planning (11)
_ Planning final products without final assembly
_ Planning without final assembly (50)
_ Planning a material variant without final assembly (55)
_ Characteristic planning with dependent requirement (56)
_ Planning with planning material (60)
_ Planning a material variant with planning material (65)
_ Planning assemblies/components
_ Planning at assembly level (70)
_ Planning without final assembly at assembly level (74)
Make to Order Planning.
Make-to-order planning describes the planning of a product that is specially manufactured for a
specific sales order. You use sales order oriented planning when it is not necessary or not
possible to plan a product
.
Neither Sales and Operations Planning (SPO) nor Demand Management are included in this
scenario. The sales orders are included directly in material requirements planning.
The sales orders are planned as customer independent requirements in material requirements
planning. A separate planning segment is generated for make-to-order production.
Starting at the sales order, you can define how low in the BOM structure make-to-order planning
is permitted, which means that assemblies and components are procured just for the pegged
requirement (the sales order) and their inventory is managed for this sales order.
The resulting planned orders are transferred to production and the material is manufactured with
reference to the sales order.
The following pre-planning strategies are available in this scenario (selection):
_ Make-to-order production (20)
_ Make-to-order production with configuration (25)
_ Make-to-order production for a material variant (26)
Consumption-Based Planning
Consumption-based planning is based on past consumption values and uses the forecast
or other statistical procedures to determine future requirements. Procurement is triggered
either when a defined order point is fallen short of (reorder point) or by forecast
requirements, which are calculated based on past consumption.
If you use forecast requirements, the consumption pattern should be fairly constant or
linear with few irregularities. A prerequisite is an efficient and current inventory
management.
The forecast, which calculates future requirements using historical data, is carried out at
regular intervals. The forecast values have a direct effect in MRP as forecast
requirements. If you use reorder points, an order proposal is always generated when the
warehouse stock falls below the reorder point.