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This blog is to explain functionality of PP optimizer in S/4 HANA 2020 PPDS, its limitations and SAP recommendations to use PP optimizer in S/4 HANA 2020

What is Production Planning Optimizer optimization or PP Optimizer?

PPO is to integrates purchasing, manufacturing, and distribution so that comprehensive tactical planning and sourcing decisions can be simulated and implemented based on a single, global consistent model.

PP optimizer offers cost-based planning which means that it searches through all feasible plans to find the most cost-effective solution (in terms of total costs). Total cost covers the following aspects:

  • Production, procurement, storage, and transportation costs

  • Costs for increasing the production capacity.

  • Penalties for violating (falling below) the safety stock level.

  • Late delivery penalties

Benefits of PP Optimizer

PP Optimizer uses advanced optimization techniques, based on constraints and penalties, to plan product flow along the supply chain. The result is optimal purchasing, production, and distribution decisions; reduced order fulfilment times and inventory levels; and improved customer service.

Starting from a demand plan, the optimizer determines a permissible short- to medium-term plan for fulfilling the confirmed and estimated sales volumes. This plan covers both the quantities that must be transported between two locations (for example, from a producing plant to a source plant or production plant to a distribution centre), and the quantities to be produced and procured. When making a recommendation, PP Optimizer compares all logistical activities to the available capacity.

Features of PP Optimizer

Production Planning Optimizer complements the existing planning process in PP/DS by providing the following capabilities:

  • Ensure material flow end-to-end: from components to finished goods, across plants and distribution centres.

  • Consider capacity constraints and initial allocated capacities (on time-bucket level)

  • Balance the load across alternative sources of supply

  • Propose PP/DS orders in time buckets which could be defined on a sub-daily level

  • Create the orders in right lot sizes (across BOM levels), promoting a smoother transition from time-bucket-based planning to time-continuous scheduling.

  • Consider penalties (safety stock, maximum stock), costs (procurement, production, storage) and constraints (production capacity and lot sizes).

Process Flow

  • You run MRP live or PP/DS heuristic for simple planning, that is, without the need to consider capacity constraints.

  • You execute Production Planning (PP) Optimizer for the selected (sub-)structures with constraints.

  • You perform detailed scheduling by picking up the (time-bucket) orders created by the PP Optimizer and scheduling them in a time-continuous manner.

The diagram below illustrates this process flow:


Restrictions apply and recommendations from SAP:

  • Currently, in location types, only production plant and distribution centres are supported. MRP areas, customers, vendors etc. are not supported.

  • Quota arrangement is not supported by Production Planning Optimizer.  PP Optimizer will only consider costs associated with each source of supply to decide how the supply elements will be created.

  • Shelf life of product is not considered by the optimizer.

  • Currently Retail articles or Retail scenarios are not supported by the optimizer.

  • Only demands and receipts in net segment (i.e. make-to-stock segment) will be supported. Made-to-order segment, project account assignments, or any other specific planning segments will not be supported.

  • Creation of delivery schedules (for scheduling agreements) are not supported. The optimizer will, however create purchase requisitions. Scheduling agreements should not be used while using PPO scenarios

  • The output supply elements for Production Planning Optimizer are created by stacking them one over another at the start of the bucket. If detailed scheduling algorithm (sequence heuristic or detailed scheduling optimizer) is used to plan the output of PP Optimizer on time-continuous basis, the results might be different from the one proposed by the optimizer.  The algorithm could potentially displace the bucket-based orders to other dates.  This may result in a different result from what is proposed by the optimizer.

  • Validities at PDS level, operation level or component level are considered for passing PDS data to optimizer. For this purpose, a PDS which is valid at the start of the bucket is only considered. If the validity of PDS ends inside a bucket and if an order is created with that PDS, then the order end date could be after the PDS validity end date.

  • Safety stock method, SM (maximum of safety stock or safety days of supply) will only consider static safety stock quantity.

  • Sequence-dependent setup planning works on the concept of setup transitions from one order to another for which cost and setup time can be defined. Based on this, the optimizer can plan for an order sequence considering setup cost and setup time. However, the initial setup status caused by any existing order in a bucket (which was not deleted in optimizer run) will not be considered by the optimizer. Hence, the optimizer will only plan considering the setup transitions for the newly created orders.

  • Resource network is not considered. Only mode linkages inside the PDS are considered.

  • It will not be possible to maintain capacity extension over non-working periods. Capacity extension is only possible for buckets where there is a capacity. Same is the case with minimum capacity constraint also.

  • Optimizer internally performs scheduling of receipts as a first step and then calculates the capacity of the resources as per this schedule. For scheduling purpose, the calendar resource is taken from the last operation of the PDS. Hence, the optimizer cannot consider the calendar of multiple resources for scheduling purpose.

  • Maximum constraint (maximum inter-operation time between operation) will not be respected by the optimizer.

  • Explanation of logs – Result log explanation functionality is currently not available.

  • PP Optimizer does not consider CDP or block planning.

  • Currently, it is not possible to maintain Bucket offset at PDS level in master data.

  • The orders within fixing interval of resource will get deleted but the fixing interval capacity will not be available for PP Optimizer to plan. This means that in case of capacity shortage, the system may not re-plan the deleted orders. To protect such orders from deletion, either mark them as fixed orders or ensure that the fixing interval is within the planning time fence.

  • Location calendars (production calendar, etc) are not respected by the optimizer and are assumed to be working 24/7.

  • Operations of orders with resources which have setup matrix will be created as deallocated at the start of the bucket.

  • Currently, time-dependent stock level (safety stock, safety days of supply, maximum stock) is only supported by PPO. Currently no other application in PP/DS reads or supports time-dependent stocks which are maintained for PP Optimizer.

In addition to the above, the following functionalities are not supported

  • Product interchangeability

  • Special procurement keys such as production in alternate plant and withdrawal from alternate plant

  • iPPE-based PDS (PDS based on iPPE)

  • Fixed pegging in order reading, demand fulfilment or order cost

  • User-defined bounds (Target corridor or constraints) such as bounds for production, procurement, stock transfers, etc.

  • Cost function for production, procurement and stock transfer

  • Sub-contracting scenarios

  • Target stock, target days of supply and maximum days of supply

  • Transportation resource

  • Handling resource

  • Storage resource

  • Object dependencies

  • Generated setup matrix

  • Operation scrap


You can refer below notes and blogs for more information about PPO.







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