Manage Promotion Planning in SAP APO

  • by Alok Jaiswal, Consultant, Infosys Limited
  • May 27, 2016
Learn how promotion planning can be configured in SAP Advanced Planning and Optimization (SAP APO) to model special events or promotions separately from the normal forecasting process. Follow a step-by-step procedure to configure and run the associated master data objects, run simulations, and interpret the results.
Learning Objectives

By reading this article, you will learn about:

  • Promotion planning in SAP Advanced Planning and Optimization (SAP APO)
  • A case study used for demonstration purposes
  • Prerequisites to carrying out promotion planning
  • Configuration specific to promotion planning
  • Forecast generation including promotion planning and results interpretation
  • Promotion reporting
  • Promotion management
Key Concept

Promotion Planning is a special feature provided by SAP Advanced Planning and Optimization (SAP APO) through which one can plan special events or promotions separately from the normal forecasting process. Promotions could be events such as festival discounts, contests, or trade fairs. These can either be one-time or repeated events.

SAP Advanced Planning and Optimization (SAP APO) promotion planning is particularly useful in understanding the impact of promotions in your normal statistical forecast and segregating it from a stand-alone forecast. This helps you to better model the forecast accuracy. It also helps in keeping the processes of baseline forecasting and promotion planning completely separate. In a real scenario, both statistical forecasting and promotions planning functions could be handled by two different departments—for example, statistical forecasting done by regional planners and promotion planning handled by the sales or marketing department.

Figure 1 shows a sample trend of price variations of demand for a product. It shows how sales are influenced by periodic price discounts of 50, 10, and 30 percent. Promotion planning helps you to understand fluctuations in demand based on promotions and accordingly to model the behavior.

Figure 1
The effect of price discounts on product demand

Business Scenario

Consider an example of an electronics manufacturer that manufactures and sells multiple models of televisions around the globe. For my business scenario in this article, the company has two existing models (MODEL1 and MODEL2) and is planning to launch a new model of the television (MODEL3). However, all three models cater to the same customer segment, and the introduction of a new model might have an impact on the existing models. Therefore, this also needs to be planned by the business.

Figure 2 shows the business scenario discussed above. I also describe other scenarios highlighting different situations and how to map them within the system.

Figure 2
A sample business scenario

Prerequisites to Carry Out Promotion Planning

Before using promotion planning, you need to set up important Demand Planning (DP) objects. I assume that the reader knows how to set up master data in SAP APO and how to configure basic DP objects. For this article, I explain the major DP objects, highlighting configurations specific to promotion planning.

Master Planning Object Structure (MPOS)

The MPOS is created via transaction code /SAPAPO/MSDP_ADMIN. For the example discussed in this article, the MPOS contains Location, Product, Product Group, Customer, and Country/Market as shown in Figure 3.

Figure 3

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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