Planning for Shelf Life in the Consumer Packaged Goods Industry Using SAP APO

  • by Arun Negi, Manager, Deloitte Consulting LLP
  • Jagadeesh Kalwadmath, Consultant, Deloitte Consulting LLP
  • November 18, 2015
Learn key design challenges in the consumer packaged goods (CPG) industry for shelf life planning using SAP Advanced Planning and Optimization (SAP APO).
Learning Objectives

After reading this article, you’ll know:

  • Key shelf life requirements that are common in the consumer packaged goods (CPG) industry
  • Details of master data in SAP ERP Central Component (ECC) and SAP Advanced Planning and Optimization (SAP APO) environments to support CPG industry requirements
  • New functionality to integrate shelf life with ECC
  • An analytical capability to support decision making
  • Enhancements that you can use to incorporate shelf life information into a supply plan
Key Concept
Shelf life restrictions directly influence inventory levels, obsolescence costs, and stock-out costs, so there could be a competitive advantage for companies in the consumer packaged goods (CPG) industries that provide a longer shelf life to customers and more accurately predict inventory waste due to expiration.

The limited shelf life of products is a major supply chain planning issue in the food and beverage sector of the consumer packaged goods (CPG) industry. Usually it’s too late to manage shelf life requirements during execution, as it does not provide enough time to consider other available options. Therefore, it becomes important to consider shelf life during distribution requirements planning, master production scheduling, deployment, and material requirements planning. 

Planning for shelf life in these processes can help to improve inventory waste, reduce inventory holding costs, and reduce waste caused by expiration of the product by taking proactive action on the current stock situation. Therefore, the provision of the shelf life planning function is crucial for the SAP Advanced Planning and Optimization (SAP APO) system to succeed at supply chain planning in the food and beverage sector.

Shelf life requirements in the CPG industry need to be adequately addressed by the planning engines available in SAP APO Supply Network Planning (SNP). Some of the critical challenges in SAP APO for CPG industries are:

  • The standard SNP deployment heuristic does not consider shelf life.
  • SAP APO only provides the option to maintain one minimum remaining shelf life.
  • Standard alerts provided by SAP do not provide visibility to customers about their products’ minimum shelf life.

With the help of innovative changes to the existing functionalities combined with enhancements to planning engines using various user exits, Business Add-Ins (BAdIs), and Business Application Programming Interfaces (BAPIs) available in SAP APO and SAP ERP Central Component (ECC), we were able to address various complex business requirements for the CPG industry.

An ideal supply planning solution is integrated both upward and downward as shown in Figure 1. To provide a supply planning solution that provides business value, you should integrate shelf life consideration in supply planning.


Figure 1
Planning integration between demand planning, supply planning, and execution

Arun Negi

Arun Negi is a manager at Deloitte Consulting LLP.

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Jagadeesh Kalwadmath

Jagadeesh Kalwadmath is a consultant at Deloitte Consulting LLP.

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