Accelerated Order Processing with EDQA in Global ATP

  • by Shishir Kumar Dwivedi, Senior Consultant, Deloitte Consulting LLP
  • January 13, 2017
Learn when and how to use Event-Driven Quantity Assignment (EDQA) in SAP Advanced Planning and Optimization (SAP APO) Global Available-to-Promise (Global ATP).
Learning Objectives

After reading this article, you will learn about:

  • The role of SAP Advanced Planning and Optimization (SAP APO) Global Available-to-Promise (Global ATP) in a typical order confirmation process
  • The use of Event-Driven Quantity Assignment (EDQA) functionality in SAP APO Global ATP
  • The potential business benefits
  • Details of the configuration setup to enable EDQA functionality
Key Concept

Available-to-Promise (ATP) is an order management business process that attempts to commit and fulfill customer orders on required dates and quantities considering business rules and availability of finished products, components, and resources. Order-processing lead time can be reduced by using advanced system functionalities to dynamically confirm or unconfirm orders based on business rules. These orders can then immediately participate in further activities such as delivery creation without any necessity of manual review or batch rescheduling. Event-Driven Quantity Assignment (EDQA) is functionality available in SAP Advanced Planning and Optimization (SAP APO) Global Available-to-Promise (Global ATP) that aims at improving confirmation of higher-priority orders in a dynamic manner in a constrained supply situation.

Business users continually try to improve customer service by making the supply chain efficient and minimizing order processing times. SAP Advanced Planning and Optimization’s (APO’s) Event-Driven Quantity Assignment (EDQA) functionality can help to fulfill customer orders on time and without manual effort from business users.

ABC Inc. is a global CPG giant with a dynamic supply chain. ABC Inc. continually tries to improve its supply chain process and improve customer service levels.

ABC Inc.’s customers in the Western Europe region place orders with extremely short lead times. The majority of orders are placed a day before the required ship date. ABC Inc.’s smaller customer orders are placed early in the morning while the orders from high-priority customers are placed in the afternoon or early evening. ABC Inc. tries to create a delivery for these orders as early as possible to allow the warehouse to start picking, packing, and shipping activities to meet the customer’s requested delivery date.

For products with a constrained supply situation, low-priority orders placed earlier in the day consume the Global Available-to-Promise (ATP) quantity while the high-priority orders placed in the afternoon remain unconfirmed. Even if the inventory is received for manufacturing plants or other distribution centers, the high-priority customer orders placed later in the day continue to remain unconfirmed. Business users have to manually review these orders each day and assign confirmation to the right orders before a delivery can be created. The manual assignment of confirmed quantities to the orders is time consuming and error prone. It results in a higher order processing time that in turn can result in a late delivery at the customer’s location.

EDQA helps assign newly available quantities to orders with high priority and can also re-assign quantities from low-priority orders to orders with higher priority in real time (Reassignment of Order Confirmation), thereby avoiding any batch processing requirements or manual order touches. All order confirmations in SAP ERP Central Component (ECC) systems are always up to date in real time and overall order processing lead time is reduced.

The Sales Order Process

Customer orders can be placed any time of the day using one or more means such as SAP CRM, EDI, or web portals. Sales orders that are created may not be committed (no or partial confirmation) if sufficient Global ATP quantity is not available. Business users expect sales orders to be confirmed automatically based on priorities if there is any subsequent improvement in the supply situation after order creation (i.e., an increase in Global ATP quantity). Once the sales orders are confirmed, deliveries for such orders can be created and sent to the warehouse for picking and shipping to customers.

Automatic confirmation of a sales order upon an increase in Global ATP quantity can ensure:

  1. No manual intervention by business users to monitor the Global ATP situation and confirm sales orders
  2. Background delivery creation jobs can automatically create deliveries for confirmed orders, thereby reducing order processing times
  3. Business rules to confirm sales orders based on predefined priorities are always respected
  4. Business users do not have to wait for background rescheduling processes (backorder processing [BOP]) to be executed to view the updated order confirmation
Note
Several configuration steps are required to implement SAP APO Global ATP that are beyond the scope of this article. The reader is advised to follow the SAP Configuration Guide as well as SAP’s online documentation wherever required.

Introduction to the Order Confirmation Process

In this section, I compare an order fulfillment process without EDQA against the process with it.

Typical Order Fulfillment Process Flow Without EDQA

The order creation window for any organization can vary depending on the business requirement, and high-priority orders can be placed any time during the day. Organizations within several industries (e.g., consumer goods, high-tech, pharmaceuticals, wholesale distribution, and retail distribution) expect to ship out the customer orders as soon as possible to provide a high customer service level as well as to effectively use the resources in the warehouse/distribution center and transportation.

Orders may not be confirmed during creation depending on the Global ATP situation irrespective of the priority of the order. In order to ensure that high priority orders are confirmed and that the low-priority orders are cut under a constrained supply situation, the business needs to either manually change the confirmations or run a batch BOP. Both these options are time-consuming and can negatively affect the daily business cycle. If the volume of customer orders is high, the manual assignment of confirmed quantities (sales orders changes or interactive BOP) may not be feasible.

In Figure 1, you see that due to rescheduling of orders using batch processes, crucial time is lost during the daily business cycle. The overall cycle time is delayed due to this, and delivery creation and picking activities cannot start until the BOP run is completed and orders are updated with new confirmation quantities.


Figure 1
Order fulfillment process flow without EDQA
 

Shishir Kumar Dwivedi

Shishir Kumar Dwivedi (B.E., MBA) is an SAP APO consultant at Deloitte Consulting LLP. He has more than 10 years of supply chain and enterprise consulting experience. He specializes in consulting and service offerings in the SAP SCM and Order Fulfillment space.

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