721 scen overview english

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Demand-driven Procurement

SAP Best Practices for Retail (India)

SAP Best Practices



Scenario Overview – 1

Purpose

This scenario begins with the required planning steps. The forecasting processes and different

consumption-based MRP procedures. The supply source determination schema in SAP R/3 is

then outlined in brief and the various options explained. The Purchase Order process shows

you how to work with the Planning Workbench. Order optimizing comprises quantity

optimizing, investment buying, load building and goods receipt capacity check. The last

section shows you how vendor evaluations can be used to optimize goods procurement.

Benefits Alongside article-specific inventory management, the SAP R/3 System provides an accurate

data basis for using the comprehensive range of requirements planning methods. The main

task in requirements planning is to monitor stocks and, in particular, generate automatic order

proposals for purchasing.

With the planning workbench, extensive functionalities for order optimization and vendor

evaluation you can handle the whole process for demand-driven procurement.

Key process flows covered Requirement Planning

Planning Run

Supply Source Determination

Contract Processing

Planning Workbench

Order Optimizing

Purchase Order Monitoring

Vendor Evaluation

Purpose and Benefits:



Scenario Overview – 2

Required

SAP EHP3 for SAP ERP 6.0

Company roles involved in process flows

Retail Non-Seasonal Purchaser

Retail Non-Seasonal Purchaser – Power User

Retail Non-Seasonal Purchase – Manager

Retail Replenishment Planner

Retail Replenishment Planner – Power User

Retail Master data Manager

Retail Warehouse Clerk

Retail Store Manager

SAP Applications Required:



Process Flow Diagram Requirement Planning

MRP ProcedureAutomatic

reorder pointplanning

Carry out theindividual

Forecast fromthe article

master

Optional:Evaluating the

PlanningResults

Enter goodsreceipt for

purchase order

Optional:Planning File

Optional:Reprocess the

Forecastresults

E v e n t

UnloadMaterials

fromTruck

R e t a i l N o n - S

e a s o n a l P u r c h a s e r

R e t

a i l

R e p l e n i s h m e n t

P l a n

n e r

R . N o n -

S e a s .

P u r c h . –

P o w e r U

Convert thePurch.

Requisition to aPurchase Order

MRP ProcedureTime-phased

planning

MRP ProcedureForecast-based

planning

MRP ProcedureTime-phasedplanning withreorder point

planning

Alternative:Carry out the

individual

Forecast fromthe menu Carry out

Single-Item,Single-Level

Planning



Process Flow Diagram Supply Source Determination

R e t a i l R e p l e n i s h .

P l a n n e r

R e t a i l N o n -

S e a s .

P u r c h a s

e r

Supply Source:Source List

MaintainSource List

AutomaticConversion of the Purchase

Requisition to aPurchase Order

CreatePurchase Order with reference

to P.Requisition

Supply Source:Purchase Info

Record

CreatePurchase

Requisition

R e t a i l N o n -

S e a s . P u r .

P o w e r U .

Goods receiptin DC

E v -

e n t Unload

MaterialsfromTruck

R e t a i l R e p l e n .

P l a n

n e r P o w e r

U s e r

Create Contract

CreatePurchase

Requisition(Assign Supply

Source)

Release Order for the Contract



Process Flow Diagram Purchase Order Process and Vendor Evaluation

R e t a i l R e p l e n i s h .

P l a n n e r

R e t a i l N o n -

S e a s .

P u r c h a s

e r

CreatePurchase Order

via eCATT

PlanWorkbench:

OnlineRequirements

Planning

R e t a i l N o n -

S e a s . P u r .

P o w e r U .

Goods receiptin DC

R N S .

P u r .

M n g r

R e t a i l R e p l e n .

P l a n

n e r P o w e r

U s e r

Return onInvestment

Order Cancellation

Order Release

Order Optimizing:InvestmentBuying Run

Alternative:Simulate

InvestmentBuying Run

InvestmentBuying

Analysis

Order Optimizing:

Load Building:Carry out

Single-Level,Single Item

Planning

ConvertPurchase

Requisition toPurchase Order

Automatic LoadBuilding

Manual LoadBuilding

Maintaining the

Vendor EvaluationManually

Vendor

EvaluationAutomatic

Reevaluation

Comparison of Evaluations

Ranking List

Executing anEvaluation of

the Art./Merch.Cat.

eCATT for Vendor Evaluation

CreatePurchase Order

Order

Optimizing:Goods receipt

capacitiy check



Requirements Planning



Objectives

Automation of the procurement process on site level

Inventory monitoring of a site

Central + distributed application



Requirements Planning: Forecasting Model

Basic value

Basic value

Trend value

Basic value

Season indices

Constant model

Trend models

Seasonal models

Seasonal trend models

Manua

l

Models Parameters

Automatic

Model selection

Automatic

T: Test for trend

S: Test for season

A: Test for trendand season

Manual model selection with additional

automatic test

Selection



Requirements Planning: Overview

RP type

Requirements

Planning

Consumption

values

10/2000 987

11/2000 1000

12/2000 1251

Purchase

Requisition

Item 10

Item 20

Purchase Order

Item 10

Item 20

Forecast

indicator ? Articles Articles

Forecast



Forecast Applications

Forecast Application

Calculation of the reorder

point and the safety

stock by the forecast.

The forecast values are

copied as requirements

and replace the reorder

point.

Calculation of the reorder point and the safety

stock by the forecast.

Reorder Point

Planning

The forecast values are

copied as requirements.

The planning run is only

carried out on predefined

dates.

Time-Phased planning can

be applied in combination

with Reorder Point

planning.

Forecast-Based

Planning

Time-Phased

Planning

Reorder Point

Planning



Source Determination



Purchase Order: Supply Source Determination

Quota arrangement Quota arrangement

?? 60% 60% 40% 40%

2 Source listSource list

Outline agreementsPurch .info records

Regular vendor

Purch . requisitionWITHOUT

supply source

Article PCS-04-MRP201for VZ01 50 pc?

3

MIT

Supply source ind .

1

Stock transfer deliv -ery schedules

Supplying sites

• Find external source of supply only

• Find internal source of supply only

• Find internal supply sourcefirst , then external

• Find external supply sourcefirst , then internal

Purch . order Vendor PCS-V201

Art. 3214 20 pc

Art. 5110 15 pc

PReqVendor ??

Art. 321420 pc Art. 511015 pc

Article Article

5

4 Supply

region ?

Vendor R3001 Vendor PCS-V201



Order Processing



Planning Workbench

Manual planning

Select worklist

- Site

- Vendor

Material selection- Stock planner

- Merchandise category

Default data

- Item category

- Account assignment

category

Control data

- Sort algorithms

Application settings- Display

Worklist settings

- Sequence

Internet services

WWW

e-mail

General settings

- Hide processed worklist

- Expand levels with one

element

- Display symbols

Start variant



Planning Workbench: Manual Planning

Planning workbench with integrated manual planning

Worklist personalization

Simple display navigation in tree format

Display of additional information, for example, site or vendor

master data

Direct access to the Internet or mail system

Worklist view personalization

Manual planning Display of consumption and/or forecast data

Use of restriction profiles

Automatically generated purchase requisitions



Order Optimizing



Quantity Optimizing: Rounding Profiles

0 No rounding

1 Round up to a multiple of the order

units/sales units

2 Round up to order/sales/logistical units of

measure

3 Round up to order/sales/logistical units of measure, or log. unit of measure, zero qty for

order units only

Check the permitted units of measure

used by vendors or recipients

• Rounding method

• Rounding rule

• Unit of measure group

Dynamic profile

AUn % Up % Down

CAR 70.0 10.0

LAY 80.0 10.0PAL 90.0 10.0

Dynamic Rounding Profiles



Investment Buying: Purpose

Investment buying is a method of determing procurement

proposals that take account of future price increases, and are

to be covered by external procurement

The aim of Investment buying is to purchase articles

in suitable quantities

in good time

as cheaply as possible

taking account of various influencing factors



Investment Buying: Overview

Open

PO quantities Stock on-hand

ROI Parameters

Forecast

Investment

Buying

Analysis

ProtokollLog of items

found relevant to

Purchasing

Purchase

requisitions

-

Worklist

Purchase

orders

Purchase price

conditions

Purchase price

higher than

future price

Actual ROI

is lower than

required ROI

Calculate

order quantity

Select condition changes

Select relevant articles

(Info Record)

Simulate

purchase price

Calculate ROI



Load Building

Load building is a process used to group together purchase

orders and other requirements, while taking account of

procurement restrictions, and thereby reduce procurement

costs.

Definition



Load Building Overview

Purchase requisitions

other order

processes

Manual load building

EDI to vendor

Automatic

load building process

Req. Planning Investment buyingprocess

Promotionorders

Simulation list process

Purch. Req.. ...Purch. req . ...

Purch. Req.. ...

Purch. order ...Lieferant 326

Purch. Order ...Vendor 326

Without existing

requirementelements

Purchase orders



Goods receipt capacity check

Up to now, there was no check for sufficient capacity for the delivery date of a

planned delivery in the goods receipt area of a warehouse. If the goods are deliveredto a warehouse door that does not have any free capacity, there can be a bottleneck

in the goods receipt area of a warehouse. At the same time, another warehouse door

might have enough capacity.

Advantages for the retailer and vendor:

Taking the goods receipt capacity into account prevents potential bottlenecks.

The vendor's delivery date planning utilizes the capacity of the retailer's goods

receipt areas.

The vendor can schedule the deliveries better since the planned time window for

inbound deliveries is binding.



Vendor Evaluation



Functions in Vendor Evaluation

Quality audits

Vendor C

Regular vendor

for Article 1 ?

Vendor A Vendor B Vendor C

Vendor Evaluation



Automatic Subcriteria: Overview

Main Criteria

Price

Quality

Delivery

Service

Subcriteria

Price level

Price development

GR inspection

Complaints

Audit

On-time delivery

Quantity reliability

Shipping instructions

Confirmation



Analyses for Vendor Evaluation

Evaluation for Article 1 General Vendor Evaluation

84 75 92 88 81 Vendor A

General Vendor Evaluation

Total Preis Price Qual Qual . . Lief Dlvy . . Service Service

90

84

81

92

75

90

90

92

76

93

88

74

85

81

84

Analysis for Article/ Merchandise category

Vendor Evaluation Evaluation

Total Preis Price Qual Qual . . Lief Dlvy . Service Service

88

81

81

90

93

76

92

74

86

84

Vendor A

Vendor C

Evaluation Comparison

Total Preis Price Qual Qual . . Lief Dlvy . Service Service

Vendor B

Vendor A

Vendor C

Total Preis Price Qual Qual . . Dlvy. Service Service

88 81 93 92 86

HIT LIST

721 scen overview english

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