How Companies Can Enhancing Supply Chain Resilience in a Post-COVID World with SAP S/4 HANA’s AATP (Part 1)
Introduction: It's been over 3 years since the COVID shutdown, and the world is gradually returning to its operational rhythm. However, the disruptions and bullwhip effects caused by the pandemic on the global supply chain are still being felt to this date. We've learned that supply chains are tightly interconnected globally regardless of the industry or size of organizations in a hard way. You may remember the boba shortage story, it was a not so sweet demonstration of the perfect storm caused by overlooked ASIA-US supply chain issues.
Now, in the year 2023, it seems like every firm's town-hall meeting is buzzing with talk of #ai, much like the time when "Blockchain" and "Big Data" were the "It" words on the bingo card. While embracing AI technologies empowers businesses to innovate and stay competitive in the ever-evolving supply chain landscape becoming one of the essential strategies for a lot of companies, ERP systems remained as the robust core tool that helps businesses navigate their long-term operations.
In this series of posts, I will discuss the use cases of #sap #s4hana 's Advanced Available-to-Promise (aATP) and demonstrate how organizations can effectively enhance their Order/Lead to Cash (Or some functional developers may still refer to #sapsd) management, leverage the SAP S/4 HANA out of box functions to fortify their #supplychainsustainability , thrive in dynamic and uncertain environments, and maximize the benefits aATP offers.
Understanding aATP:?SAP S/4 HANA aATP was first introduced by SAP in 2016, it offered compliment capabilities to the S/4 HANA’s basic ATP function for the order fulfillment management, ?while providing additional features that experienced users may found similar to what Advanced Planner Optimizer (APO) used to offer regarding the supply protection and production-based sales order confirmation. ?
Ever since aATP taking off and evolving within each S/4 HANA’s release, more features, functions, advanced algorithms configuration apps have been introduced. The function is available on both cloud and on-premises versions.
By the time I’m writing this article, the latest aATP family have had total 11 features released. ?They are listed below. Please find more details on SAP page at the link here.
??????Alternative-based Confirmation (ABC)
??????Backorder Processing (BOP)
??????Product Allocation (PAL)
??????Product Availability Check (PAC)
??????Supply Creation-Based Confirmation (SBC)
??????Supply Protection (SUP)
??????Substitutions (SUB)
??????Availability and Capability Checks (ACC)
??????Business Process Scheduling (BPS)
??????Controller & Central Function (CTL)
??????Object and Value Determination (OVD)
We will take a look on some of those features, and their use cases in the series. ?
Alternative-based Confirmation (ABC):
When introducing clients the S/4’s ATP functions, I’ve often been asked: “Claire, what happens when one of my warehouse doesn’t have enough materials but the one down the road have the same thing that LSPs can just pick it up for the same shipment?” or, “Can the SAP be smart enough to deplete all the ordered SKUs in the warehouse, and then find the best substituted products and confirm the rest of the quantities for the customer?” The answer is yes, yes, this is exactly what the ABC intended for. ?
Here is a simple use case on using ABC: A HVAC equipment manufacturer receives a large sales order for 100 Standard AC units, but the requested delivery plant only has 50 units available by the customer's required delivery date. However, it has based on the internal logistic strategy and customer agreement configured the ABC. The confirmation logic triggered and confirmed first 50 available unit, and then the 20 compatible AC units in older model, and 30 unrestricted use stock from different plant. The order and final confirmation result can look like below:
By using the ABC, Businesses can quickly identify possible alternatives when a sales order requirement cannot be confirmed by the requested delivery date due to insufficient product availability at the requested delivery plant. ABC can substitute the originally requested delivering plant, storage location, or product based on the pre-configured substitution strategy. The system identifies all possible alternatives, considering factors like quantity and delivery date, and selects the most advantageous option when multiple alternatives can fulfill the requirement equally. ??
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Backorder Processing (BOP): ??
Backorder occurs when there is insufficient product stock to fulfill all customer orders immediately. BOP is a widely used Order Management technique that involves running confirmations for all orders and checking for any inventory changes over a specified period. For example, customer A's order cancellations can free up the stocks for Customer B's orders that came in on the same day. Running BOP can automatically reconfirm the stocks for Customer B's orders.
Note: While ECC's SD did offer BOP handling to an extent, clients often found issues such as the BOP run being highly sensitive, inaccurate, and requiring constant monitoring, this was primarily due to the offer lacking the granularities for configuring more complicated priority setting, sorting and confirmation strategy.??
At the time I'm writing this article, SAP had released 7 BOP confirmation strategies so far:???
o??Win: Fully confirm orders on time or raise exceptions.
o??Gain: Retain or improve confirmations; raise exceptions if needed.
o??Improve: Try to keep or improve confirmations; may lose stock.
o??Redistribute: Reconfirm based on priorities, may gain, or lose.
o??Fill: Won’t gain stocks or getting better confirmation date; may lose if required.
o??Lose: Delete all current confirmations; quantity released for more critical orders.
o??Skip: Keep current confirmation, not included in availability check.
I remember during COVID shutdown, where everyone (including me!) was baking bread at home, and it soon became nearly impossible to buy the bread flours and baking yeast in-store or online.
Let’s assume when the next unpreventable event happened to the manufacturing plant and production orders faced delays, without any manual intervention, aATP’s BOP would automatically reevaluate existing confirmations, prioritize the customers that need the flours the most in no time. In this imaginary scenario, it could provide the retail, distributors larger quantities to ensure the flours and yeast distributed to the mass consumers, rather than providing product to individual buyers. (Note that this is a simplified example for a complicated supply chain issue, when the inventory has already been consumed down to zero and all orders have been confirmed, then merely using BOP will not help ease the situation. Later chapter will discuss other compound solutions.)
This dynamic batch response to changes in availability can help businesses manage customer expectations and optimize their order fulfillment processes. At the end of the day, even if not all customers getting all of their bread flours and baking yeast home on time, majority of customers or the higher priority ones would be able to be getting some batches of orders till the bottleneck been resolved.
In the next series, I will discuss the usage of the Product Allocation (PAL) and Supply Protection (SUP), and how when they have been used at the same time can secure customer’s min and max order quantities. ?
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1 年Sujeet Acharya, you may be interested in this blog post.