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Performance Measurement with KPIs
The APO key performance indicators (KPIs) express abstract supply chain objectives in financial orphysical units for comparative purposes !ata pertainin" to the various plannin" and executionprocesses such as demand plannin" or production schedulin" is collected# measured# andtransformed into physical or financial information that can be used to compare results and thusmeasure performance The data is stored in the $usiness Information %arehouse ($%) APO KPIsinclude some &'O metrics and some that have been developed by &AP KPI ueries pull actualand historical performance data from the $% for vie*in" in the 'ockpit
APO KPIs are "eneral purpose measurements that can be used as a frame*ork for "au"in"performance effectively They provide the necessary structure and set the direction forimprovement +ou can access the follo*in" types of KPIs,
uality-service
production control
supply chain flexibility
inventory control
supplier performance human resources
Prerequisites 'onnect to &AP $% ./$ or hi"her (APO 'ustomi0in")
!efine 1' destination (APO 'ustomi0in")
2aintain context menu profile (APO 'ustomi0in")
Install $% 1rontend
1ulfill $% prereuisites for -3 data extractors
Install correspondin" -3 modules (for example# 4 must be installed for KPI, 4eadcount)
KPI ueries are addressed by their *orkbook I!s Any chan"es in ueries must also be
chan"ed and saved in the same *orkbook In the case of some KPIs# for example# the Inventory !ays of &upply KPI# material types
are defined as filter values 'han"es must also be made and saved in the same *orkbook
Process FlowThe performance measurement process is an on"oin" one in *hich performance results arecontinuously compared and analy0ed in order to determine *hether your business is on or off tar"etin meetin" its "oals 5eneral performance measurement consists of the follo*in" procedures foreach performance cycle 'ycles include procurement# manufacturin"# and distribution
!efine a strate"ic supply chain vision
!efine executive level measures for each objective
6stablish mana"erial level objectives that ali"n *ith executive ones
6stablish tar"ets for defined metrics throu"h benchmarkin"
2easurin" supply chain performance in APO can be achieved by follo*in" the cycle illustratedbelo*,
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. 7ie* current performance results by launchin" KPI ueries from the &'' KPI ueries pullactual and historical performance data from the $usiness Information %arehouse ($%) forvie*in" in the 'ockpit
/ evie* the data and compare it to your current plan3 Identify those areas in your performance cycles that need improvement and set tar"ets for
the upcomin" round Performance cycles include procurement# manufacturin"# anddistribution
8 Adjust the plannin" process *herever necessary9 Perform plannin" process in plannin" system (APO): 6xecute plan in execution system (for example#-3); 7ie* performance results (step /)
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The use of metrics to measure performance is a complex business process that reuires carefulplannin"# analysis and a thorou"h kno*led"e of the supply chain 1or more information onmeasurin" supply chain performance# see the follo*in" topics,The &'O 2odel
The SCOR Model
APO KPIs *ere developed accordin" to the &upply 'hain Operational eference (&'O) model#the standard reference process model developed by the &upply 'hain 'ouncil (&'') that hasbecome the cross=industry standard for supply chain mana"ement (&eeAcknowledgementsatend of topic)
The &'O model depicts the basic supply chain# ran"in" from supplier>s supplier to customer>s
customer# as a series of linked &ource 2ake!eliver execution processes mana"ed by a
series of plannin" processes
The SCOR models su!!l" chain
.??< &upply 'hain 'ouncil
The &'O model describes,
standard mana"ement processes
relationships bet*een standard processes
http://help.sap-ag.de/sapdocu/crossind/apo/apo30/helpdata/EN/f9/bc7c37c3b97f45e10000009b38f8cf/content.htmhttp://help.sap-ag.de/sapdocu/crossind/apo/apo30/helpdata/EN/f9/bc7c37c3b97f45e10000009b38f8cf/content.htm7/25/2019 Apo Kpis Helpsap
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standard metrics to measure process performance
mana"ement practices that produce best=in=class performance
Performance and dia"nostic metrics to"ether drive performance improvement To evaluate supplychain performance# the &'O model advocates a set of measurements comprisin" a combinationof the follo*in" metrics,
cycle=time (production cycle time and cash=to=cash cycle) cost (cost per shipment and cost per *arehouse pick)
service and uality (on=time shipments# defective products)
asset (inventories)
#$am!le of SCOR metricsThe follo*in" table defines the top level &'O processes and supplies the correspondin" metricsused to measure performance in each area%e&el ' SCOR management !rocesses and equi&alent metrics
SCORProcess
(efinition Functions Metrics )KPIs*
Plan Processes that balancea""re"ate demand andsupply to develop acourse of action *hichbest meets establishedbusiness rules
!emand-supply plannin",
Assess supply (cate"ori0ation)
Prioriti0e demand
Plan inventory# distribution#production# material and capacityfor all products and channels
2ana"e plannin" infrastructure,
!ecide to make or buy
'onfi"ure supply chain
Plan lon"=term capacity andresources
Phase products in-out
2ana"e product line
!emand and shipmentforecast accuracy
Adherence to plans
Inventory turns
Plannin" cycle time
&ource Processes that procure"oods and services tomeet planned or actualdemand
2aterial acuisition,
Obtain# receive inspect# hold#issue material
2ana"e sourcin" infrastructure,
2ana"e vendor contracts#
Procurement unit costs
7endor lead times
2aterials uality
2aterials inventories
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payments# certification andfeedback
'ontrol sourcin" uality
6n"ineer components
2ake Processes that transform"oods to a finished stateto meet planned or actualdemand
Production 6xecution,
euest-receive material
2anufacture-test product
Packa"e-release product
2ana"e make infrastructure,
2ana"e facilities-euipment
Track production status
'ontrol production uality
&chedule operations
Plan short=term capacity
Production costs
Product uality
'han"eover items
'apacity utili0ation
!eliver Processes that providefinished "oods andservices to meet plannedor actual demand
Order mana"ement
%arehouse mana"ement
Transportation mana"ement
!istribution mana"ement
On=time shipment
On=time delivery
Order fulfillment time
eturns
+enchmarking TechniquesPerformance tar"ets are set usin" one of the follo*in" methods# or a combination,
Historical benchmarkingis the most common and easiest method to implement since the
tar"ets are based on historical baseline levels $aseline measures attempt to establish thecurrent performance level of a company# product# process# etc and should be established
before improvement activities are initiated 1or example# a company that currently has anorder fill rate of ?@ mi"ht set its performance tar"et at ?9
Internal benchmarkingis the most popular approach In this method# comparable
departments# products# facilities are measured *ithin a company# *ith a separate set ofmetrics bein" used for *arehousin"# manufacturin"# customer service# etc The best=of=class is determined in each area and their metrics are used as a basis for establishin"performance tar"ets for the others
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External benchmarkingis the most difficult method since it involves collectin" performance
data from other companies This method is usually accomplished *ith external professionalhelp
Theoretical target-setting involves a company=*ide analysis to determine ho* supply chain
performance could theoretically be improved The performance tar"ets are based onestimates "enerated durin" the analysis This method is far from easy to perform because
only a very thorou"h analysis can determine ho* a decision *ill impact various aspects ofthe supply chain 4o*ever# this method is the surest *ay of developin" a balanced set ofmetrics
AcknowledgementsIntroductionThis &upply 'hain Operations eference=model (&'O) has been developed by the &upply='hain'ouncil (&'') as the cross=industry standard for supply=chain mana"ementThe &'' is an independent# not=for=profit trade or"ani0ation dedicated to the development#promotion# and support of &'O as the cross=industry standard&'' operations and &'O maintenance are funded by member dues 2embers receive severalimportant benefits# includin" six=month lead time on access to the most recent release of &'O#
discounts to attend &'' conferences# and membership on &'' Technical 'ommittees that mana"e&'O development and maintenanceTo join the &''# please submit the application form available on the &''Bs %eb site at ***supply=chaincom,istor"The &'' *as or"ani0ed in .??: by Pitti"lio abin Todd C 2c5rath (PT2) and Advanced2anufacturin" esearch (A2)# consistin" of ;3 foundin" member companiesPT2 and A2 led the ori"inal &'' in developin" the &'O model# publishin" &'O elease.@ on Dovember ./# .??:The contributions and hard *ork of all ori"inal foundin" &'' members is "ratefully ackno*led"edby all *ho use &'O todayThe &'' *as formally incorporated as non=for=profit trade or"ani0ation in Pennsylvania in Eune.??;
Requested AcknowledgementsAll *ho use the &'O model are asked to ackno*led"e the &'' by placin" theseackno*led"ements at the front of any documents describin" or depictin" the &'O model and itsuse
All *ho use &'O are encoura"ed to join the &''# to both further model development and obtainthe full benefits of membership
Su!!l" Chain Performance Measurement
This &'' function allo*s you to track and measure your supply chain performance by retrievin"information stored in the $usiness Information %arehouse ($%) pertainin" to your businessPerformance measurement is a *ay to determine if your business has improved or not The APOKPIs are metrics that measure your company>s performance in specific areas 1or example# a KPIcould tell you *hat percent of your products *ere dama"ed durin" production $ased on thatinformation# you could set a "oal to reduce the percent of dama"ed "oods by 9 Afterimplementin" the steps necessary to reach the "oal# you *ould a"ain launch a KPI uery to checkyour pro"ress
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Integration
Key performance indicators are stored in the $% They can be accessed from APO by launchin"KPI ueries from the &upply 'hain 'ockpit The results are displayed in "raphs# tables# etc on6xcel sheets
1rom APO# the information is retrieved throu"h remote function calls (1's) The systeminfrastructure is illustrated belo*,
S"stem infrastructure for KPIs
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Prerequisites
!ata bein" transferred bet*een the various systems 2F&T have the same name throu"hout 1orexample# product 2. in APO must have the same I! as it does in -3 because $% data is -3=based To avoid the types of inconsistencies depicted in the examples belo*# *hen ne* objects arecreated in APO# they should be named accordin" to the namin" conventions described in the APO =
-3 Inte"ration documentation GIDKCore Interface (CIF) Pre-settings
+usiness Information -arehouse data is R./01ased22 It is not 1ased on the model created inthe Su!!l" Chain #ngineer3
APO objects are identified by 5FI!s# but in the $% they have the same name and I! as they do in-3 *hich can lead to problems 1or example# if a plant is already named @@@. in -3# but is called.@@@ in APO# no data selection for that plant *ill be available in $% *hen a uery is launched from
APO for Plant .@@@ That data is stored in $% under Plant @@@.
APO$%-3
Plant, .@@@ Plant, @@@. Plant, @@@.
The number of characters in a name varies in APO and $% The follo*in" len"ths are allo*ed in$% (elease ./$H subject to chan"e),
Product, .
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