Accurate Order Promising through Global ATP in a Consolidation Environment

  • by Ranjan Sinha, Senior Managing Consultant, IBM
  • August 25, 2014
Learn how to implement rules-based available-to-promise (ATP) in a consolidation scenario including the use of multi-level ATP.
Learning Objectives

By reading this article, you will learn how to:

  • Configure the settings for global available-to-promise (ATP) to support a multi-level check in a consolidation environment
  • Set up the corresponding SAP Advanced Planning and Optimization (APO) master data to support this process
  • Configure the SAP ERP Central Component (ECC) side (and master data) that support this process
Key Concept

Fixed pegging is the process of establishing the relationship of a receipt document to the requirement document it fulfills. This linkage is not broken when receipts or requirements are rescheduled in time or through a planning run. This is different from dynamic pegging, a relationship that is determined between the receipt and the requirement regarding its placement in terms of time. Dynamic pegging is a LiveCache function that is changed dynamically, as the name suggests, based on how the receipts and requirements are placed. However, fixed pegging relationships do not undergo such a change. 

When sales orders are received at a location from which the products are shipped and not necessarily stocked, the use of rules-based available-to-promise (ATP) along with the consolidation location can enable the order promising based on availability of inventory at an alternate location. It also can trigger the movement of product from the alternate location to the location from where the product is shipped.

Consolidation functionality enables the movement of products from the manufacturing locations to the consolidation location. The products often do not exist in the finished form at the manufacturing location, but need to be finished from an intermediate product. The inclusion of multi-level ATP enables the business process of just-in-time manufacturing (JIT) so that the final finishing operation does not need to be completed until a sales order is received. This is especially true when there are multiple packaging variants that can be ordered by customers, and it is difficult to forecast the packaging variants accurately. By delaying the finishing operation, an organization can reduce the inventory carrying costs and not end up with a package inventory for which there is no demand.

I describe a step-by-step approach on how to set up such a complex environment inside SAP Advanced Planning and Optimization (APO) based on my implementation experience in the chemical industry. Navigating this complexity is a challenge for anyone involved in a project in this area because it requires a number of key configuration and master data elements to be set up correctly. I help you grasp the essential elements on the setup of such an environment. Although complex, the setup of such an environment adds a lot of value to the supply chain by enabling accurate order promising, automating the movement of product from the location where it is available to the location where it is desired, and enabling a JIT process that reduces inventory carrying costs.

Note
Multi-level ATP is part of the overall global ATP functionality. ATP is a generic term to describe the process of checking availability for a sales order and ensuring that promises are made to the customer on a sales order. Global ATP is the functionality that resides within APO that does the order promising; however, it is more advanced than the functionality inside SAP ERP Central Component (ECC) that is simply called ATP.

Ranjan Sinha

Ranjan Sinha is a senior managing consultant at IBM. He has vast experience implementing SAP APO functionality in various industries, including electronic and chemical.

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