Supply Protection in Supply Assignment(ARun)

rameshraja_r
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11-20-2023 9:41 PM
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Introduction:

This blog explains how Supply Protection time buckets are considered in Supply
Assignment(ARun). Supply Protection is used to protect minimum quantities
maintained for specific characteristic combination (such as Customer, Distribution
Channel, etc.) and represents future demand. Supply Assignment(ARun) is used to
reserve supply for actual demand (Sales Orders, STOs, etc.). Hence it is essential to
understand the behavior of Supply Protection in Supply Assignment to meet desired
business needs.

Scenario:

Let us take an example where there are 3 channels (Wholesale, Ecommerce, Retail)
competing for same inventory. Assume there is a need to protect inventory based on
business priorities as shown below.
Priority Channel Customer
1 Ecommerce All Customers
2 Retail All Customers
2 Wholesale Customer A
3 Wholesale All Others

[Note - This example is a mixture of Horizontal and Vertical Protection]

Minimum Quantities to be protected:
Priority Channel Customer Feb Mar Apr
1 Ecommerce All Customers 50 50 50
2 Retail All Customers 30 30 30
2 Wholesale Customer A 20 20 20

Pre-Requisites:

o 'Advanced ATP' is activated for the checking group

o ‘With Supply Protection for Specific Document Types’ is enabled

for the corresponding scope of check

o Material is enabled for Supply Assignment at the plant

Step 1:

Create a new Supply Protection Object in Fiori App Manage Supply Protection and
Activate the object.
Supply Protection Setup

Step 2:

Maintain the general information and create the planning horizon for the supply
protection (In this example, the SUP object is set up with monthly time buckets and
consumption based on Requested Delivery Date of the actual demand).

Step 3:
Maintain Characteristics (In this example, the characteristics are Distribution
Channel and Customer Number).

Step 4:

Maintain protection quantities for corresponding characteristic combination as shown

below.
Supply Protection Setup

Step 5:

Supply is created in system as shown below:

Supply Delivery Date Quantity
On Hand Stock Today (Jan 15) 120
Purchase Order 1 Feb 20 120
Purchase Order 2 Mar 25 120

Note: Purchase Orders are created in such a way that the future time buckets are
covered.

Step 6:

Create a new Sales Order SO1 for Wholesale channel for Customer B with
requested delivery date as Feb 7 and requested units as 100.

Once above details are entered, system will reserve the supply for the planned
protection maintained in SUP object and the new sales order SO1 will get
confirmations as shown below:
SO1 Requested Requested Confirmed Confirmed
Item Delivery Date Quantity Delivery Date Quantity
10 Feb 7 100 Feb 7 20
Feb 20 20
Mar 25 20

Problem Statement: In Step 6, the confirmation results are as expected respecting

supply protection. However it is also critical for business that SO1 does not take the
on hand inventory during supply assignment process.

For example, assume that the supply assignment rule is configured with static supply
sort rule as the priority says ( 1- On Hand Stock and 2 – Purchase Orders). When
SO1 participates in supply assignment, below is the result.
SO1 Confirmed Confirmed Assigned
Stock Source
Item Delivery Date Quantity Quantity
10 Feb 7 20 C (On Hand) 20
Feb 20 20 C (On Hand) 20
Mar 25 20 C (On Hand) 20

Even though On hand stock is supposed to be reserved for high priority future
demand for 100 units, SO1 has taken away the 40 units from the protected high
priority time buckets. As a result, the next availability check will see only 60 on hand
stock available and high priority protection buckets are in short of 40 units. So it is
important to configure supply assignment rule accordingly.

In the subsequent steps, we can observe how this can be configured to work as
expected respecting supply protection.

Step 7: Create a new Supply Assignment Rule in ‘Configure Supply Assignment

Rule’ Fiori app and maintain a static supply sort rule and supply protection execution
mode as ‘Consider Supply Protection(Upto Material Availability date)’.
Supply Assignment Rule Setup

With this configuration, system will consider the supply protection time buckets
during supply assignment process as well. Below is the result of supply assignment
process with above mentioned configuration.
SO1 Confirmed Confirmed Assigned
Stock Source
Item Delivery Date Quantity Quantity
10 Feb 7 20 C (On Hand) 20
Feb 20 20 Purchase Order 1 20
Mar 25 20 Purchase Order 2 20

Appendix:

SAP Help:

o Supply Protection

o Supply Assignment

SAP Community Blogs:

o Increasing Reliability with Supply Protection

o Supply Assignment (ARun) in SAP S/4 HANA

Almost every company wants to be reliable for its customers and to sell everything
without leftovers, but it also wants to sell everything with a high margin. Supply
protection (SUP) can help you to avoid shortages.
Business Use Case
In many cases, companies want to prevent that customers who are considered as
less important, order too much so that there is not enough stock left for the
customers of higher priority. This is very typical in the fashion industry. Here,
wholesale customers order at the very beginning of the season. Channels with
higher margins or higher strategic importance (for example, e-commerce or the own
Retail stores) order later.

On the other hand, it is also intended to sell as much as possible if there is no

shortage regarding the stock.

How Does Supply Protection Work?

Supply protection works like a virtual demand reservation defined for a specific
material-plant-combination. If there is a supply protection object defined, for
example, for the e-commerce channel, every other demand element must respect
these reserved quantities as a restriction. In other words, the available stock will be
reduced virtually, and the less important demand can only be confirmed, if there is
enough unrestricted stock left.

Within a supply protection object, you can define prioritized protection groups. Here,
the logic works like this: Demand matching with a high priority protection group can
ignore the protection for lower prioritized protection groups. Demand matching with a
low priority protection group must respect the protection of higher or equal priority.

Prioritized protection is also called “vertical protection”, whereas the protection

between different supply protection objects always works as mutual restriction with
the complete protected quantities (independent, if the supply protection object
consists of protection groups with different priorities).

Example:

Supply Protection

Whenever a supply protection object has been activated, it will be considered in the
logic of the product availability check (PAC) and restrict other demands. This is very
important, especially if there is no easy way to get additional supply such as the
example from the fashion industry.

Within a defined planning horizon, protection quantity can be defined for the different
time buckets. You can divide a protection group in daily, weekly, monthly, or
quarterly time buckets. You can, however, define only one time bucket.

Screen: Supply Protection Object

The advantage of time buckets is that they can expire over time. If there are time
buckets defined for the peak season, the protected quantities will either be used
(consumed by incoming orders / stock transport orders) or the protection can expire,
if the groups for which the protection was defined, have not ordered the expected
quantities. Expired protection frees quantities for other demands again.

If the end date of a time bucket has been passed, the protection expires. This frees
again quantities for other customers. In other words, at the end of the season, it
turns from a protected to a First-In First-Out (FIFO) principle.

Supply Protection and Product Allocation

It’s also possible to combine product allocation (PAL) together with supply protection.
With product allocation you can define a limit for the demand element. So, a specific
customer or any defined group (for example, a channel, or a market) cannot exceed
a certain limit. With supply protection you can define a minimum quantity for this
group, so that there is at least this quantity available for this customer group.

Additional Information:
Incident component for clarifications: CA-ATP-SUP

SAP Note 2885961

SAP Community Blog:

 Manufacturing and Supply Chain in SAP S/4HANA Cloud 2102

 Supply Chain in SAP S/4HANA Cloud 2111
 Alerting Multiple Matches in Supply Protection by Using Situation
Management
 Supply Protection in a Nutshell