Comparison of the Planning Methods

This topic compares the two most important planning methods of Supply Network Planning (SNP),optimization-based planning and heuristic-based planning, as well as the Capable-to-Match (CTM) planning method.

We recommend that you use optimization-based planning or CTM planning if one of the following conditions applies to you:

Your business environment is subject to strict constraints (for example, you must take into account production capacities, transportation capacities, storage capacities, and/or handling capacities)
You have alternative production locations and sources of supply (locations, production process models, and external procurement relationships)
You can decide between early production and late production
You share resources, meaning that multiple products are produced simultaneously on one resource

We recommend that you use heuristic-based planning or CTM planning if any of the following conditions apply:

You wish to plan on an infinite basis (meaning that you do not wish to consider capacities) for the medium to long-term horizon (heuristic).
You wish to plan or fulfill demands on the basis of priorities (CTM).

The following table describes the main features of each planning method:

Business Environment

Area	Heuristic and Capacity Leveling	Capable-to-Match	Optimizer
Business Objective	To create a feasible plan with few bottleneck resources	To create a feasible plan by fulfilling the highest priority demand first	To create a feasible plan with minimum costs To maximize profits
Demand Type	Not relevant	Prioritized demand and demand-specific supply strategies	Demand can be aggregated for three demand classes or by customer locations
Capacity	Heuristic run: Based on the assumption that capacity is infinite (infinite capacity planning) Capacity leveling: This is a step following on from the heuristic run to level capacities	Finite capacity planning (taking capacity constraints into account) or a simulation of infinite planning	Finite or infinite capacity planning
Planning Approach	Bucketed (period-based) planning	Bucketed or continuous planning	Bucketed planning

Constraints and Business Scenarios

Area	Heuristic and Capacity Leveling	Capable-to-Match	Optimizer
Resources	Production Transportation Handling (heuristic only)	Production Transportation Handling	Production Transportation Storage Handling
Target Stock Levels	Flexible definitions for the heuristic but capacity leveling does not consider the target stock level method specified	Can use absolute target stock levels or target days' supply for planning	Can use absolute target stock levels or target days' supply for planning. The optimizer calculates the target days' supply before the actual optimization run
Lot Sizes	Considers lot sizes for production, transportation, and procurement	Considers lot sizes for production, transportation, and procurement	Considers lot sizes for production and transportation Considers cross-period lot sizes for production Transportation lot sizes have to be used to map lot sizes for procurement
Source Determination (sourcing)	Based on quota arrangements and priorities	Based on costs (PPM/PDS and transportation), priority, or quota arrangements (quota arrangement does not split orders unless necessary to fulfill demands on time)	Cost-based sourcing decisions Can be used to modify quota arrangements
Time-Based Production Parameters	Considered	Considered	Considered
Material Constraints	Material staging is not a constraint. A backlog is created for externally planned products	Considers material constraints; external products are not planned and do not represent a material constraint	Can consider material constraints for externally planned products or by setting a high procurement cost for procured products
Supply Categorization	Not supported	You can define supply categories	Not supported
Supersession and Discontinuation of Products	1:1 - Supports supersession (supersession chains and form-fit-function classes)	1:1 - Supports supersession (forward interchangeable supersession chains and form-fit-function classes)	1:1 - Supports supersession (supersession chains and form-fit-function classes)
Aggregated Planning	Supports aggregation planning and disaggregation	Supports aggregation planning on two levels of the supply chain. You can also choose to aggregate demands and supply on a time basis or by order types for product	Supports aggregation planning and disaggregation
Maximum Stock Levels by Product	Not considered	Not considered	Considered as a constraint
Push Distribution Stock to Downstream Locations	Not supported (but is supported bydeployment)	Supported by supply distribution	Can be controlled using storage costs
Minimum Resource Utilization	Not supported	Can consider minimum receipt quantities	You can define a minimum available capacity for a resource and assign costs for falling below this minimum level (this only applies to production resources)
Resource Capacity	Does not make a distinction between standard and extended capacity	Does not make a distinction between standard and extended capacity	Can make a distinction between standard and extended capacity
Demand Prioritization	Capacity leveling does not recognize demand priorities	Demand can be sorted by different sort criteria	Demand can be aggregated for three demand classes or by customer locations
Shelf Life	Not considered	Can consider shelf life constraints in a restricted way (for example, CTM does not consider shelf life propagation).	Can consider shelf life constraints in a restricted way (see SAP note 579556) Batches are not recognized
Subcontracting	Supported (the subcontractor has to be modeled as a location)	Supported (the subcontractor has to be modeled as a location)	Supported (the subcontractor has to be modeled as a location)
Scheduling Agreement Processing	Supported	Not supported	Not supported

Configuration

Area	Heuristic and Capacity Leveling	Capable-to-Match	Optimizer
Relevant Master Data	Locations Products Resources (single-mixed, multimixed, and bucket resources) PPMs and PDSs (SNP) Transportation lanes	Locations Products Resources (single-mixed or multimixed, and bucket resources) PPMs and PDS (SNP and PP/DS, but some restrictions) Transportation lanes CTM profile (supply profiles, demand profiles, and so on)	Locations Products Resources (single-mixed or multimixed, and bucket resources) PPMs and PDSs (SNP) Transportation lanes SNP optimizer profile Optimizer costs
Flexibility of Algorithm	Macros can be used to modify heuristic values that are entered	You can modify aspects of the calculation by changing profile settings and maintaining parameters	Has a user function for modifying the optimizer input log Macros can be used to modify optimizer values that are entered
Average Effort	Minimal	Medium to large, depending on the complexity of the supply chain	Medium to large, depending on the complexity of the supply chain Cost fine-tuning is the major effort
Daily Operation	After you have configured the parameters, the heuristic can run automatically	After you have configured the parameters, CTM can run automatically	After you have fine-tuned the costs, the optimizer can run automatically
Comprehensibility	Transparent results Explanation of planning results by the system	Transparent results based on priorities. The analysis complexity is governed by the supply chain complexity Order tracking by pegging Graphical representation of results Explanation of planning results by the system	Requires some understanding of cost trade offs Cost summaries are available after the optimization run
Integration with PP/DS	Bucketed plans need to be converted into continuous plans	Bucketed plans need to be converted into continuous plans Continuous plans can be created	Bucketed plans need to be converted into continuous plans Recognizes material flow, capacity consumption, and setup statuses from PP/DS
Net Change Planning	Supported	Supported - with options for dynamic and fixed pegging	Have to replan all demands Can use the SNP optimization bound profile to restrict replanning