Capacity Planning with SAP: Free Book Excerpt

The Process of Capacity Management
Capacity management and its functions for planning, sequencing, leveling and scheduling orders, represent an important step in the chain of events for the lean, agile and efficient provision of a detailed production program. Without capacity planning, we fail to consider reality in our efforts to produce as close as possible to customer demand.

Unfortunately, during most SAP implementations, capacity management is put at the bottom of the list of priorities and, due to budget and time constraints, most often falls through the cracks. Well-meaning attempts to make it work later down the track are often unsuccessful due to the overwhelming mountain of issues that need to be dealt with after go-live.

In this chapter, I want to highlight the significance of capacity management and dive deeper into the individual areas and steps that need to be taken to translate a planned demand and a customer demand into a leveled and noiseless production program.

When managing capacity, we usually go through the following phases: planning for capacity, sequencing orders, leveling orders within the available offering and finally scheduling and fixing the orders into the frozen zone. The capacity situation can be evaluated before, during and after the planning phase. Possible overloads are detected and resolved with specific activities which should be clearly defined and documented. It is of utmost importance that the capacity manager knows which horizon is being evaluated so that appropriate measures can be taken.

It is therefore necessary to detail planning horizons and to identify what needs to be done in each one. Figure 2.1 shows this detail and provides a view of long, medium and short-term planning horizons. It also depicts a frozen zone and backorder horizon where expediting and rescheduling take place.

Figure 2.1: Planning horizons

As shown in the figure and detailed in Chapter 1, planning ends where the frozen zone begins and we can arrive at two general rules which streamline the process of capacity management:

Rule of Planning #1: ‘There is a point in time at which planning activities end’.
Rule of Planning #2: ‘Plan your resources in the medium and long term, and manage demand. Plan your resources and sequence in the short term, and schedule and manage supply’.

Keeping these rules in mind throughout the remainder of this book, we can now look at the specific activities performed in capacity planning, sequencing, leveling, scheduling and evaluation.

Start reading now! 

Does your organization need to improve the way it manages capacity management in SAP? Capacity Planning with SAP dives into an often overlooked area of SAP and provides readers with an understanding of SAP Capacity Management functionality, including capacity planning, sequencing, leveling, and scheduling. Identify quick wins you can implement to improve results and identify opportunities. Learn more about your options for resource leveling and identify how to leverage capacity planning to build a more robust supply chain program at your organization.

Explore how to leverage material requirements planning (MRP) and advanced planning systems (APS) in SAP to build a better supply program. Take an indepth look at how to translate planned and customer demand into an effective production program. Walk through standard SAP ERP functionality available for capacity management planning. By using practical examples, tips, and screenshots, the author brings readers quickly up to speed on the fundamentals of SAP Capacity Management.

– How to leverage SAP Capacity Management
– Capacity planning best practices
– Options for capacity scheduling in SAP ERP
– Automatic resource and material scheduling with SAP APO

Author Uwe Göhring is an SAP Mentor and has worked in supply chain optimization for more than 20 years. He is the founder and president of bigbyte software systems inc., which optimizes SAP supply chains around the world by coaching planners, buyers, and schedulers in policy setting and strategic and tactical planning. He resides in New York City and operates primarily (but not exclusively) in North America and Europe. He has extensive experience working with companies in a variety of industries.