Exploit Demand Planning to Forecast Dependent Requirements in SAP APO

  • by Alok Jaiswal, Consultant, Infosys Limited
  • October 20, 2015
Learn the process flow of an SAP Advanced Planning and Optimization (APO) forecast with bills of material (BOM). Follow a step-by-step procedure to release a forecast and interpret the results.
Learning Objectives

By reading this article, you will learn how to:

  • Understand the master data required in SAP Advanced Planning and Optimization (SAP APO) to use dependent requirements forecasting
  • Identify the configuration needed in Demand Planning (DP) and relevant objects to be used in DP bills of material (DP BOM)
  • Create master data in DP and create a forecast
  • Release the forecast from DP for dependent requirements
Key Concept

Demand Planning (DP) in SAP Advanced Planning and Optimization (SAP APO) helps to generate forecasts based on historical values. Forecasting is generally done at the finished product level. However, for many products forecast visibility is needed not only at the finished product level but also for dependent material components. Bills of material (BOM) are used to define all materials required in a product along with the required quantities. In SAP APO, a BOM along with the work center are combined into a single object called production process model (PPM) or production data structure (PDS). By combining the components of finished products via PPM in DP, one can carry out forecasting at the material components level.  

Forecasting with bills of material (BOM) is an advanced functionality feature available in SAP Advanced Planning and Optimization (SAP APO) Demand Planning (DP). It helps to forecast dependent requirements in DP. The system determines the component parts of finished products through the production process model (PPM) or the production data structure (PDS).

This gives flexibility to planners to not only forecast at the finished good level but also to segregate the forecast for a product at a lower level. This is particularly useful when the same component can be used in more than one product and thus the availability of material components represents a constraint. In DP without a DP bill of material (DP BOM), planners perform planning at the finished good level, but at the end, they cannot see the corresponding demand for the dependent product. DP BOM has been introduced to incorporate this feature in DP.

Business Scenario

Consider an example of an automobile manufacturer that manufactures cars with various models. In this case one of the models of the car is the finished product, but wheel, engine, and head lamps would be the dependent material components. With the use of DP BOM, planners can forecast the demand not only at the finished product level but also the corresponding dependent demands that would be generated for different material components.

Figure 1 shows a sample finished product along with its BOM.

Figure 1
An example showing a finished product along with material components (the numbers in parentheses represent the quantity of material components needed to produce one unit of the finished good — in this example a car)

Alok Jaiswal

Alok Jaiswal is a consultant at Infosys Limited.

He has more than six years of experience in IT and ERP consulting and in supply chain management (SCM). He has worked on various SAP Advanced Planning and Optimization (APO) modules such as Demand Planning (DP), Production Planning/Detailed Scheduling (PP/DS), Supply Network Planning (SNP), and Core Interface (CIF) at various stages of the project life cycle.

He is also an APICS-certified CSCP (Certified Supply Chain Planner) consultant, with exposure in functional areas of demand planning, lean management, value stream mapping, and inventory management across manufacturing, healthcare, and textile sectors.

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