Demand-driven Procurement SAP Best Practices for Retail (US)

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1 Demand-driven Procurement SAP Best Practices for Retail (US)

2 Scenario Overview – 1 Purpose and Benefits: Purpose Benefits
This scenario begins with the required planning steps. The forecasting processes and different consumption-based MRP procedures. The supply source determination schema in SAP R/3 is then outlined in brief and the various options explained. The Purchase Order process shows you how to work with the Planning Workbench. Order optimizing comprises quantity optimizing, investment buying, load building and goods receipt capacity check. The last section shows you how vendor evaluations can be used to optimize goods procurement. Benefits Alongside article-specific inventory management, the SAP R/3 System provides an accurate data basis for using the comprehensive range of requirements planning methods. The main task in requirements planning is to monitor stocks and, in particular, generate automatic order proposals for purchasing. With the planning workbench, extensive functionalities for order optimization and vendor evaluation you can handle the whole process for demand-driven procurement. Key process flows covered Requirement Planning Planning Run Supply Source Determination Contract Processing Planning Workbench Order Optimizing Purchase Order Monitoring Vendor Evaluation

3 Scenario Overview – 2 SAP Applications Required: Required
SAP EHP3 for SAP ERP 6.0 Company roles involved in process flows Retail Non-Seasonal Purchaser Retail Non-Seasonal Purchaser – Power User Retail Non-Seasonal Purchase – Manager Retail Replenishment Planner Retail Replenishment Planner – Power User Retail Masterdata Manager Retail Warehouse Clerk

4 Process Flow Diagram Requirement Planning Event
Unload Materials from Truck Retail Non-Seasonal Purchaser MRP Procedure Automatic reorder point planning MRP Procedure Time-phased planning MRP Procedure Time-phased planning with reorder point planning Carry out the individual Forecast from the article master MRP Procedure Forecast-based planning Retail Replenishment Planner Optional: Planning File Alternative: Carry out the individual Forecast from the menu Optional: Reprocess the Forecast results Optional: Evaluating the Planning Results Convert the Purch. Requisition to a Purchase Order Carry out Single-Item, Single-Level Planning R. Non-Seas. Purch.– Power U Enter goods receipt for purchase order

5 Process Flow Diagram Supply Source Determination Ev-ent
Unload Materials from Truck Retail Replenish. Planner Supply Source: Source List Maintain Source List Release Order for the Contract Create Purchase Requisition (Assign Supply Source) Automatic Conversion of the Purchase Requisition to a Purchase Order Retail Non-Seas. Pur. Power U. Goods receipt in DC Retail Non-Seas. Purchaser Supply Source: Purchase Info Record Create Purchase Requisition Create Purchase Order with reference to P. Requisition Retail Replen. Planner Power User Create Contract

6 Process Flow Diagram Purchase Order Process and Vendor Evaluation
RNS. Pur. Mngr Comparison of Evaluations Ranking List Executing an Evaluation of the Art./Merch. Cat. Retail Replenish. Planner Create Purchase Order via eCATT Plan Workbench: Online Requirements Planning Order Cancellation Order Optimizing: Investment Buying Run Order Optimizing: Load Building: Carry out Single-Level, Single Item Planning Convert Purchase Requisition to Purchase Order Order Release Alternative: Simulate Investment Buying Run Manual Load Building Retail Non-Seas. Pur. Power U. Goods receipt in DC Retail Non-Seas. Purchaser eCATT for Vendor Evaluation Maintaining the Vendor Evaluation Manually Vendor Evaluation Automatic Reevaluation Create Purchase Order Order Optimizing: Goods receipt capacitiy check Retail Replen. Planner Power User Return on Investment Investment Buying Analysis Automatic Load Building

7 Requirements Planning

8 Objectives Automation of the procurement process on site level Inventory monitoring of a site Central + distributed application

9 Requirements Planning: Forecasting Model
Selection Manual model selection with additional Manual Automatic automatic test T: Test for trend Automatic Constant model S: Test for season Model selection Trend models Seasonal models A: Test for trend Seasonal trend models and season Models Parameters Basic value Basic value Trend value Basic value Season indices

10 Requirements Planning: Overview
RP type Forecast ? Articles Articles indicator Purchase Requisition Item 10 Consumption Forecast Item 20 values Requirements 10/ Planning 11/ 12/ Purchase Order Item 10 Item 20

11 Forecast Applications
Reorder Point Planning Reorder Point Planning Forecast-Based Planning Time-Phased Planning Calculation of the reorder point and the safety stock by the forecast. The forecast values are copied as requirements and replace the reorder point. Calculation of the reorder point and the safety stock by the forecast. The forecast values are copied as requirements. The planning run is only carried out on predefined dates. Time-Phased planning can be applied in combination with Reorder Point planning.

12 Source Determination

13 Purchase Order: Supply Source Determination
? 1 PReq Purch . requisition Vendor ?? WITHOUT Art. 3214 Quota arrangement Quota arrangement 20 Art. 5110 pc supply source 15 pc 60% 60% ? ? 40% 40% Article PCS-04-MRP201 for VZ01 50 ea 2 Source list Source list 3 Article Article Purch . order Vendor PCS-V201 Supply source ind . Art. 3214 20 ea Art. 5110 15 ea • Find external source of 4 Outline agreements MIT supply only Supply region Purch info records . • Find internal source of ? supply only Regular vendor • Find internal supply source first , then external Stock transfer deliv - • Find external supply source 5 ery schedules first , then internal Vendor PCS-V201 Supplying sites Vendor R3001

14 Order Processing

15 Planning Workbench Manual planning Start variant Internet services
Select worklist - Site Start variant - Vendor Material selection - Stock planner - Merchandise category Default data Internet services General settings - Item category - Account assignment - Hide processed worklist category Control data - Expand levels with one WWW - Sort algorithms element Application settings - Display symbols - Display Worklist settings - Sequence

16 Planning Workbench: Manual Planning
Planning workbench with integrated manual planning Worklist personalization Simple display navigation in tree format Display of additional information, for example, site or vendor master data Direct access to the Internet or mail system Worklist view personalization Manual planning Display of consumption and/or forecast data Use of restriction profiles Automatically generated purchase requisitions

17 Order Optimizing

18 Quantity Optimizing: Rounding Profiles
Dynamic Rounding Profiles 0 No rounding 1 Round up to a multiple of the order units/sales units 2 Round up to order/sales/logistical units of measure 3 Round up to order/sales/logistical units of measure, or log. unit of measure, zero qty for order units only Dynamic profile Rounding method Rounding rule Unit of measure group AUn % Up % Down CAR LAY PAL Check the permitted units of measure used by vendors or recipients

19 Investment Buying: Purpose
Investment buying is a method of determing procurement proposals that take account of future price increases, and are to be covered by external procurement The aim of Investment buying is to purchase articles in suitable quantities in good time as cheaply as possible taking account of various influencing factors

20 Investment Buying: Overview
Purchase price Select condition changes Open PO quantities conditions Stock on-hand Select relevant articles (Info Record) ROI Parameters Simulate purchase price Purchase price higher than future price Cancellation Forecast Calculate ROI Actual ROI is lower than required ROI Investment Calculate order quantity Log of items found relevant to Purchasing Cancellation Protokoll Buying Analysis Purchase requisitions - Purchase orders Worklist

21 Definition Load Building
Load building is a process used to group together purchase orders and other requirements, while taking account of procurement restrictions, and thereby reduce procurement costs.

22 Load Building Overview
Investment buying Promotion Req. Planning process orders Purch. Req. . ... Purch. req . ... other Purch. Req. . ... order processes Without existing Purchase orders Purchase requisitions requirement elements Purch. order ... Lieferant 326 Purch. Order Vendor Automatic load building process Simulation list process Manual load building EDI to vendor

23 Goods receipt capacity check
Up to now, there was no check for sufficient capacity for the delivery date of a planned delivery in the goods receipt area of a warehouse. If the goods are delivered to a warehouse door that does not have any free capacity, there can be a bottleneck in the goods receipt area of a warehouse. At the same time, another warehouse door might have enough capacity. Advantages for the retailer and vendor: Taking the goods receipt capacity into account prevents potential bottlenecks. The vendor's delivery date planning utilizes the capacity of the retailer's goods receipt areas. The vendor can schedule the deliveries better since the planned time window for inbound deliveries is binding.

24 Vendor Evaluation

25 Functions in Vendor Evaluation
Regular vendor ? for Article 1 Vendor A Vendor B Vendor C Quantities Complaints Quality audits Prices Delivery dates GR checks Vendor Evaluation Vendor C

26 Automatic Subcriteria: Overview
Main Criteria Subcriteria Price Price level Price development Quality GR inspection Complaints Audit Delivery On-time delivery Quantity reliability Shipping instructions Confirmation Service

27 Analyses for Vendor Evaluation
HIT LIST General Vendor Evaluation Total Price Preis Qual Qual . . Dlvy Lief . . Service Service Vendor B 90 92 90 93 85 Vendor A 84 75 92 88 81 Vendor C 81 90 76 74 84 Analysis for Article/ Merchandise category Vendor Evaluation Evaluation Total Price Preis Qual Qual . . Dlvy Lief . Service Service Vendor A 88 81 93 92 86 Vendor C 81 90 76 74 84 Evaluation Comparison General Vendor Evaluation Evaluation for Article 1 Total Preis Price Qual Qual . . Dlvy Lief . Service Service Total Preis Price Qual Qual . . Dlvy . Service Service Vendor A 84 75 92 88 81 88 81 93 92 86

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