Master APO Requirements Strategies

  • by Wolfgang Eddigehausen
  • January 1, 2006
Does your manufacturing requirement strategy in APO match your business plan? Find out how to determine if it does and adjust it if it doesn’t.
Key Concept
Advanced Planner and Optimizer (APO) requirements strategies determine not only whether a product is manufactured based on a make-to-stock or make-to-order principle. They also determine how existing product forecasts, called the planned independent requirements (PIRs), are consumed (or reduced, when replaced by actual sales orders). It is mandatory to define an appropriate requirement strategy to enable forecast consumption. Some requirements strategies require that forecast consumption be enabled, as otherwise the system-suggested procurement quantities would be too high. Definition of a requirements strategy is not mandatory in APO, and if none is defined, some default rules are applied during planning.
During an Advanced Planner and Optimizer (APO) implementation, as well as regular use of the system, it is important to align the system’s strategies for manufacturing requirement creation and planning with those of the business. Selection and customization of the appropriate APO requirements strategy is a crucial factor.

I’m going to explain the various APO requirements strategies, how they work, and what is required to make the system really work for you. This article applies to a manufacturing environment, where the required products are made, but you could also use the described requirements strategies in a purchasing scenario. Requirements strategies are used by the system to answer the following questions:

  • Is the forecast used to drive the production and translated directly into manufacturing orders? Is manufactured stock controlled per customer or as general warehouse stock?

  • Is the forecast consumed once sales orders are received?

Principles

You can view the product’s requirements strategy in the product master Demand tab (Figure 1). This field is usually maintained via the R/3 Core Interface (CIF), which uses the R/3 Material Requirements Planning (MRP) strategies. R/3 has more planning strategies than there are requirements strategies in APO, since only planning strategies that require up-front planning are sent to APO. In a pure make-to-order environment, no activities are carried out before the sales order is created. Thus, no product forecast exists and APO does not need to carry out any planning tasks. Sales orders created in R/3 are flagged automatically as not relevant to MRP when using the planning strategy 10 (make-to-stock) in R/3. This causes APO to ignore these sales orders during the planning run, ensuring that the demand is the forecasted demand only.

Wolfgang Eddigehausen

Wolfgang Eddigehausen is a highly experienced expert in the areas of business process design, re-engineering, and user adaption, as well as process realization in complex SAP-centric environments. He has experience in solution and enterprise architecture and project management (PRINCE2 certified) domains defining enterprise capabilities with a focus on delivering effective and efficient solutions to organizations. Wolfgang's industry knowledge includes public sector, utilities, mining, distribution, general manufacturing, process and steel industries, and consumer goods.

In most roles his task is not only to architect a solution but also to evaluate and define strategic options with a focus on end-to-end solutions rather than systems. This also includes strong emphasis on the user acceptance through an innovative user experience and mobility enablement.

His career includes successful participation and management of projects in Australia, Europe, India, Japan, Singapore, South Africa, Taiwan, and the US. These projects required interaction with all levels of an organization, from the shop floor or office through to the CxO level. Throughout his career, Wolfgang has put emphasis on a holistic approach bringing together people, processes, information, and systems in project management, architecture, and implementation roles.

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