APO Planning Horizon

For any SCM/APO implementations, planning horizon is one of the first three-subjects we have to discuss and understand. In SAP APO, there are more than 20 planning horizons. It is very confusing for most of us including experienced consultants.

The Definition

The planning horizon is the length of time companies can plan into the future with validity, validity means what works need to be accomplished and what resources are required for the work to be accomplished and what resources are available to the work to be accomplished which enables the project manager to created a detailed schedule.

This is the definition in business terms. The planning horizon can be further divided into Short-Term, Mid-Term and Long-Term planning horizon. Within each horizon, we can define if we should plan in daily, weekly or monthly bucket.

Planning Horizons in APO

There are many planning horizons in APO: SNP Production Horizon, PP/DS Planning Horizon, Planning Time Fence, Deployment Horizon, Forecast Horizon, Stock Transfer Horizon, just to name a few. Most of the time, we are using a simplified approach in discussion. For example, PP/DS horizon is 4 weeks and SNP horizon is 1 year. In fact, this is not as simple as we thought. To ensure a smooth transition between different planning processes (or planning engines), the parameters need to be understood and defined correctly.

Planning-Horizon

SNP and PPDS Intergration

In this section, we are focusing on 2 planning horizons only: SNP Production Horizon and PPDS Horizon (on SNP2 and PPDS tab of product master respectively). Accordingly to SAP’s help text:

If you do not enter any value for the PP/DS horizon or if you enter the duration ‘0’, the system automatically uses the SNP production horizon as the PP/DS horizon. Therefore, the PP/DS horizon is as long as the SNP production horizon. This means the planning intervals for SNP and PP/DS are sequenced with no gaps or overlaps. If the SNP production horizon also has a duration of 0, the system uses the PP/DS horizon from the planning version.

The problem is we are giving the choices here. Choices cause confusion and planning issues. Basically we have 3 scenarios here:

  • SNP Production Horizon > PPDS Horizon: There is planning gap between SNP and PPDS which, which will cause planning inconsistency as both SNP and PPDS will not plan in this gap.
  • SNP Production Horizon = PPDS Horizon: There is no gap and overlap between SNP and PPDS. SNP Planned Orders are converted into PPDS Planned Orders when they fall into the PPDS Horizon. However, if PPDS is planned immediately after SNP, it may create an over-planning situation.
  • SNP Production Horizon < PPDS Horizon: This is called overlap situation. In fact, it is the best option based on my experience. PPDS will consider the SNP planned orders in the overlap period and plans accordingly.

The diagram below is typical example for most SAP implementations. For long-term planning, the planning starts after mid-term planning horizon. Short-term demand and supply situations should have no impact to long-term planning results.

Planning-Horizon-APO

Supply Network Planning (SNP) is normally used for mid-term planning. If there is supply shortage within the SNP Production Horizon, SNP Planned Orders are created outside of SNP Production Horizon. In short-term, PPDS will re-replan the SNP Planned Orders depending on heuristic settings. Please note that there is fixed period called Planning Time Fence. New planned order will not be created during this fixed fence.

SNP Production Horizon can be defined in days, weeks or months. PPDS Horizon is defined in calendar days. It is recommended to have SNP Production Horizon defined in-sync with planning cycle. For example, if the SNP is planned once a week, the SNP Production Horizon should be defined in weeks. In this way, SAP will adjust the partial week accordingly.

Planning Horizon in CTM

The overlap period approach works well in unconstrained planning engine such as Heuristics. For constrained planning engine such as CTM, it requires some adjustment in term of planning process. In constrained planning, the distributed demands (i.e. stock transfers) will not be planned into the PPDS horizon. Therefore PPDS will not be able to plan for the supply shortage in short-term.

CTM is an advanced planning engine which can plan in both PPDS and SNP planning horizon. This is a 2-stage planning process. In Stage 1, CTM creates PPDS planned orders and stock transfers in constrained mode. In Stage 2, CTM creates SNP planned orders and stock transfers in unconstrained mode. A overlap period is still needed to ensure the smooth transition from short-term planning to mid-term planning.

CTM only observes SNP Production Horizon. If CTM is used in PPDS mode, it is recommended to have SNP Production Horizon same as Planning Time Fence. The chanllenge is SNP Production Horizon is in Calendar days while Planning Time Fence is in Working Days.

Planning-Horizon-CTM

Conclusion

In order to ensure planning consistency and avoid planning gap, the best practice is to maintain an overlap in planning horizons for short-term and mid-term planning.

If CTM is used for constrained planning, it is recommended to use CTM for both short-term and mid-term planning.

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