Supply network planning

In SAP APO, the master planning process is implemented in the Supply Network Planning (SNP) module. SNP offers a multitude of functionalities, not all of which can be described in the limited scope of this chapter. More details on the SNP module can be found, among others, in [10]. 

Integration of Supply Network Planning and Production Planning and Detailed Scheduling... 

The challenge in supply planning is that specifically the available production quantities per month can depend on the schedule of the products on a specific resource if change-overs consume significant time so that the overall capacity error in die rough-cut master plan would not be acceptable. Therefore, supply network planning includes also the aspect of hierarchical planning, where production quantities based on a discrete monthly... 

Gupta/Maranas (2003) as one example for a demand uncertainty model present a demand and supply network planning model to minimize costs. Production decisions are made here and now and demand uncertainty is balanced with inventories independently incorporating penalties for safety stock and demand violations. Uncertain demand quantity is modeled as normally distributed random variables with mean and standard deviation. The philosophy to have one production plan separated from demand uncertainty can be transferred to the considered problem. Penalty costs for unsatisfied demand and normally distributed demand based on historical data... 

From the different planning methods available within SNP, SNP optimization is selected because it offers the best fit to the customer requirements outlined above. The main reasons for this decision are the multisourcing characteristics of the supply network as well as the fact that the objective functions used by the SNP optimizer, profit maximization or cost minimization, correspond to the planning philosophy favored by the customer. In addition to SNP optimization with its cost-based approach, SNP offers several heuristic-based planning methods which follow a rule-based logic. 

The SNP model contains all relevant locations, i.e., production plants and distribution centers, in the supply network. The cross-locational sourcing aspect of the planning scenario is handled within the master planning process. SNP determines which of the plants produces which quantities of which products in which time periods. On a rough level, SNP also determines which production alternative is used at a specific plant, for instance with regard to ingredients and general process characteristics. 

Habla C (2006) Planning and optimization of global supply network in the process industry, Technical University of Berlin... 

Jang Y, Jang S, Chang B, Park J (2002) A combined model of network design and production/distribution planning for a supply network. Computers Industrial Engineering 43 (1-2) 263-281... 

Fleischmann et al. (2006) provide a global production network planning model used at BMW that extends the simpler load planning model proposed by Flenrich (2002). The model is a multi-period, multi-product model with an objective function that maximizes the pre-tax net present value of the network. It includes decisions on product-plant allocation, production volumes, material sourcing volumes by supply region, structural and product-specific investments and use of overtime capacity. A major contribution of the model is the incorporation of the time-distribution of investment expenditures typically observed in automobile production networks. While tariffs are included in the transportation costs, the model does not consider further aspects of international trade such as currencies, duty drawbacks or local content rules which play a major role in practice. 

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