Does APO Really Work? - An APO Case Study
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- Air Products implemented SAP APO to integrate demand planning, supply planning, and production scheduling in order to improve forecast accuracy, reduce inventory levels, and improve customer service. - Key factors for a successful APO implementation included focusing on business processes first before technology, dedicating full-time resources to the project, and having a multi-year change management effort to fully realize benefits. - Air Products saw improvements like reduced inventory levels and instability, improved forecast accuracy from 50% to 70%, higher on-time delivery rates from 60% to 97%, and more accurate financial forecasting.
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Does APO Really Work? - An APO Case Study
- 1. Air Products and Chemicals, Inc. Stephen P. Crane, CSCP Director Supply Chain Does SAP APO Really Work? Air Products Polymers APO Case Study Supply Chain World NA Philadelphia, PA March 20, 2007 Integrating Demand Planning and Supply Planning With Production Scheduling
- 3. Who is Air Products?
- 6. Air Products Polymers, LP Worldwide Leader in Co-Polymer Dispersion Technology, Serving Adhesives, Nonwovens, Coatings, and Pressure Sensitive Adhesives markets
- 13. Air Products Global Work Processes
- 14. S&OP Process P1.1A – Identify, Prioritize, & Aggregate SC Requirements DAY 0 - 8 P1.4 – Establish & Communicate SC Plans DAY 13-15 P1.3A – Balance Supply Chain Requirements with SC Resources DAY 9 – 12 P1.2A – Identify, Prioritize, & Aggregate SC Resources DAY 0 - 8 Review Historical Sales Data Review Demand Metrics Apply Historical Sales Data Adjustments Apply Future Demand Change Notifications Run Forecast Model Agree & Communicate Approved Plans Communicate Implications to Financial & Sales Plans Review Supply Plan & Cost Projections Develop/Modify Supply Chain Plans Review Supply Planning Measures Adjust Supply Planning Constraints Load & Review Unconstrained Demand Plan Submit Supply Plan with Documented Options Approve & Publish Supply Plan Approve & Publish Unconstrained Demand Plan Gather Data [DAY0] Gather Data [DAY 0] Define Supply Capability [DAY 1 – 8] Develop Supply Plan Proposals [DAY 9] Finalize & Approve Supply Plan [DAY 10 -12] Aggregate All Sources of Supply Initiate Req Master Data Changes Review Inventory Available Review Supply Capability Create Demand Change Summary B A Partnership Meeting [DAY 13] Executive S&OP [DAY 15] Summarize Supply Chain Plans Gather Collaborative Input (Future Function) Create Unconstrained Demand Plan [DAY 1 -8] Develop Unconstrained Revenue Projection Apply New Characteristic Combos Adjust Statistical Parameters (if needed) Review and Validate Unconstrained Forecast Input Source, Make, Deliver Product & Capacity Plans Create Supply Change Summary Develop Supply Plan Proposal (Optimization) Review Alerts Assess Impact & Develop Options Review Excess Capacity, Supply Options, Demand Exceptions Issue Resolution Agree to Supply Plan Initiate any Master Data MOC Review Supply Chain Plans Review Revenue Projections A B C C BI
- 16. People Assigned Full Time Supply Chain Roles Financial forecasting Profit Center Planner Order delivery execution Transportation Planner Raw material supply Sourcing Manager Executing plant supply plan Master Scheduler BOMs, recipes Master Data Technician Data accuracy, audit process MRP Data Administrator Monthly S&OP process Supply Chain Manager APO supply planning Supply Planner APO statistical forecasting Demand Planner Overall forecast accuracy Demand Manager
- 18. S&OP Assessment Trend Improved performance from 74% to 98%
- 21. Why APO? SAP APO is Market Leader for SCP Source: AMR Research, 2005
- 25. DP/SNP Planning Book Examples DP Consensus Forecast DP Sales History SNP Capacity SNP Production Planning APO GLOBAL INTEGRATED PLANNING DP SNP ATP AIR PRODUCTS POLYMERS
- 32. Forecast Accuracy Includes Use of BI Process World Class Performance 2003 2007 50% Improvement
- 33. Forecast Accuracy vs Inventory DOS Demand Forecast Accuracy (%) Inventory Days of Supply Target Target 20% Improvement 2004 2005
- 34. Production Plan Adherence (Supply Planning Accuracy) 38% Improvement 2004 2007
- 35. Financial Forecast Accuracy 21% Improvement 2004 2007
- 37. Success requires making the right choices
- 39. APO Provides . . . Total Visibility Real Time Exception Based Integrated
- 40. Thank you for participating! Stephen P. Crane, CSCP Director Supply Chain Air Products Polymers [email_address]
Editor's Notes
- Introduction Good afternoon. My name is Steve Crane. I am the director of supply chain for the Air Products Polymers business at Air Products. In 2002, we began implementing APO in several of the business units in Air Products. Since implementation, there has been a wide range of opinions as to how well APO works in these businesses. In my business, it is working very well. In industry in general, there has also been a wide range of opinions as to how well APO works. While there have been several successful case studies published in the CPG industry, some other industry segments have not necessary faired as well. So I thought there must be some key differences between successful implementations of APO and those considered not so successful. This is what lead me to develop this case study, where I have tried to identify those critical success factors necessary for a successful implementation. I will be highlighting how we used the SCOR model as the foundation for our S&OP process and key metrics that we integrated APO with.