Supply Planning with MRP, DRP and APS Software

Supply Planning with MRP, DRP and APS Software

Screenshots and examples from JDA, SAP, Demand Works and Barloworld, PlanetTogether, and MATLAB (PlanetTogether is not a supply planning system, but is used in the book to demonstrate heuristic adjusted optimization. MATLAB is used to demonstrate the use of an external optimizer.) 


“Enterprise software solutions for materials requirement planning (MRP), distribution requirement planning (DRP), and advanced planning and scheduling (APS) can be powerful tools— if you know how to use them. This book explains five different supply planning methods and how they are incorporated into various supply planning applications. It also covers constraint-based and reorders point planning, backward and forward consumption, scheduling, and simulation.

Key Takeaways: Supply chain managers will learn how to choose the right supply planning method for their operations, avoid common supply planning software implementation issues, and configure software solutions for maximum effectiveness.”Inbound Logistics Magazine

What the Book is About

This book’s focuses on the five non-MIEO methods of supply planning, MRP/DRP, heuristics, allocation, and cost optimization. (MEIO is covered in the companion book). As with all SCM Focus books, it is written by and targeted at practitioners, the book specifically explains how each of the methods works. It also delineates the differences between them, as well as providing the history of their development and what approaches have been found to work in implementing each method over time.

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Related Topics to MRP, DRP, Heuristics, Allocation, and Optimization

The book also covers areas such as the bill of material management and master data management that are necessary to properly implement any supply planning system. It is the only supply planning book currently available which provides a comparative analysis of supply planning concepts with different applications. This includes many screen shots and descriptions of how the screens are configured and used. This provides the reader with some of the most interesting areas of functionality within a variety of applications.

Areas of Focus

  • How each of the supply planning methods works.
  • How each supply planning method processes the supply network, and what that means for the planning output.
  • How the MRP and DRP differ with a walk through of the bill of material table from a software vendor.
  • Planning dependent demand products.
  • How to prevent the all too common marginalization of the business on complex supply planning application implementations.
  • Lessons on simulation. The pros and cons of performing simulation in the main planning environment versus an external application.
  • How Lean can be incorporated into supply planning applications.
  • How reorder point planning, and how reorder point planning applies in certain circumstances, even when the most advanced planning methods are available to the company.
  • Understanding and explaining the results from a supply planning cost optimizer, and how to correctly measure the quality of output from a supply planning cost optimizer.
  • Issues with defining the customer priority list in allocation.
  • How constraint based planning works.
  • How to setup, manage and monitor simulations correctly.
  • How lead times are managed in different supply planning applications.
  • Redeployment, and why it is so important, even for finished goods companies.

A Book Based in Reality

The book also provides many examples from real life project experiences, the emphasis being on using this information to improve future of supply planning projects.

Interconnected to Web Information

In order the keep the book at a manageable and easily readable length, the book also provides numerous links out to the SCM Focus site, where supporting articles allow readers to get into more detail on topics that interest them.


  • Chapter 1: Introduction
  • Chapter 2: Where Supply Planning Fits within the Supply Chain Planning Footprint
  • Chapter 3: MRP Explained
  • Chapter 4: DRP Explained
  • Chapter 5: APS Supply Planning Methods Explained
  • Chapter 6: APS for Deployment
  • Chapter 7: Constraint-based Planning
  • Chapter 8: Reorder Point Planning
  • Chapter 9: Planning Parameters
  • Chapter 10: How MRP, DRP, and APS Relate to One Another
  • Chapter 11: Supply Planning Visibility and Master Data Management
  • Chapter 12: Understanding the Difference Between Production versus Simulation Systems
  • Chapter 13: Conclusion

Table of Contents

Chapter 1: Introduction

  • Background and Motivation
  • The Importance of Software Screenshots and Vendor Diversity
  • How Writing Bias is controlled at SCM Focus an SCM Focus Press
  • Making the Perfect Book for Those Hungry for Precise Information on Supply Planning Software
  • The SCM Focus Site
  • The History of Supply Planning Software
  • Who Is This Book For?
  • Abbreviations

Chapter 2: Where Supply Planning Fits within the Supply Chain Planning Footprint

  • Introduction
  • The Basic Nature of the Supply Chain Planning Functionality in ERP Systems
  • How ERP and APS Share the Planning Work
  • Critical versus Non-critical Materials
  • Dependent Demand Products
  • Alternative Design
  • Where a Product Location Combination is “Planned”
  • Conclusion

Chapter 3: MRP Explained

  • Introduction
  • A Brief History of MRP
  • What MRP Includes
  • What MRP Does Not Include
  • Major Functionality of MRP
  • Manufacturing Capacity Leveling/Planning
  • Backward and Forward Scheduling
  • The Bill of Material in MRP
  • Understanding MRP’s Limitations
  • MRP for Multi-plant Transfer
  • Cross-location Visibility with MRP?
  • MRP’s Impact on Purchasing and Manufacturing
  • The Master Production Schedule
  • Performing the MPS in APS Systems
  • The Importance of the Planning Time Horizon
  • Conclusion

Chapter 4: DRP Explained

  • Background
  • DRP for Deployment
  • DRP Examples
  • A Simple Way of Understanding DRP
  • Location Links in DRP
  • Conclusion

Chapter 5: APS Supply Planning Methods

  • Background
  • The Three Methods within APS
  • Heuristics
  • What Is a Heuristic?
  • Can Heuristics Be Used to Emulate MRP?
  • How Heuristics Process the Supply Network
  • How Cost Optimization Processes the Supply Network
  • How to Think of Heuristics When Selecting Between the Different Supply Planning Methods
  • Beyond the Business Requirements
  • When Does Using Supply Planning Heuristics Make Sense?
  • Allocation
  • The SAP APO CTM Application
  • CTM Product Substitution
  • Defining the Customer Priority List
  • Learning From Past Allocation Projects
  • How Allocation Decomposes the Network
  • How to Think of Implementing Allocation Projects
  • When Does Using Allocation Make Sense?
  • Cost Optimization
  • The Use of the Term “Optimization”
  • Linear and Nonlinear Optimization
  • Discrete versus Continuous Constraints
  • The Combination of Linear and Nonlinear with Continuous and Discrete Constraints
  • Supply Planning as Network Flow Problems
  • How Supply Planning Cost Optimizers Work
  • The Distinction between Implicit versus Explicit Costs
  • The Supply Network Problem Segmentation: Decomposition and the Sub-problem
  • Sub-problem and Processing Time Allocation at Runtime
  • The Measurement of Optimization Solution Quality and the Sub-problem
  • The Percent Optimally Solved
  • The Meaning of the Terms Optimal and Feasible
  • The Usefulness of the Optimal versus Feasible Metric
  • Effectively Transitioning a Company between Supply Planning Methods
  • Getting Costs into the Optimizer Application
  • Understanding Relative Costs with Respect to Cost Optimization
  • A Methodology for Helping the Business Make Value Judgments for the Optimizer
  • Cost Optimization Configuration
  • Single-objective versus Multi-objective Optimization
  • Finding Its Way into Supply Chain Planning
  • The Potential of MOO for Supply Planning
  • Things to Consider with MOO
  • MOO in the Future?
  • When Does Cost Optimization Make Sense?
  • Lessons of the History of Optimization Projects
  • Finding the Right Optimization Implementation Partner
  • Keeping the Implementation from Being Purely a Technical Exercise
  • Preventing the Marginalization of the Business
  • Focusing on Knowledge Transfer
  • Being Conscientious of the Costs Entered into the Optimizer
  • Mitigating the Issues with Cost Optimization Projects
  • Explaining How Costs Work in the Model
  • Tracking and Explaining the Optimizer Results
  • Increasing Knowledge Sharing and Transparency with a Content Solution
  • Triangulate Cost Optimizer Behavior with an External Optimizer
  • Make the Optimizer More Approachable
  • Getting the Right Implementation Help
  • Staffing Support Correctly
  • Enterprise Optimizers versus General Solvers
  • Preparing the Company for the Complexities of Cost Optimization
  • Conclusion

Chapter 6: APS for Deployment

  • Background
  • Understanding DRP as Just One Method of Deployment
  • Deployment Heuristic
  • Push versus Pull Deployment
  • Fair Share Rules
  • How to Set Up the Fair Share Scenarios
  • Cost Optimization for Deployment
  • Cost Optimization Deployment
  • Deployment with Constraints
  • Deployment and Redeployment
  • Allocation for Deployment
  • Conclusion

Chapter 7: Constraint-based Planning

  • Background
  • The Types of Constraints Commonly Used by Supply Planning Systems
  • How Supply Planning Resources Differ from Production Planning Resources
  • Important Considerations for Constraint Based Systems
  • Production Batch Sizes versus Full Resource Constraints
  • Constraint Based Planning in the Application
  • Continuous versus Discrete Optimization
  • The Challenges of Constraint-based Planning
  • Conclusion

Chapter 8: Reorder Point Planning

  • Background
  • Lean and Reorder Point Planning
  • When to Use Reorder Point Planning
  • Reorder Point Planning and Make-to-Order Environments
  • Quotations on Reorder Point Planning
  • Reorder Point Planning for Deployment / Outbound Supply Planning
  • Conclusion

Chapter 9: Planning Parameters

  • Planning Parameter Maintenance
  • Conclusion

 Chapter 10: How MRP, DRP and APS Relate to One Another

  • The History of the Supply Planning Methods
  • The Origins of the Different Supply Planning Methods
  • When Companies Expanded Beyond MRP and DRP
  • The Movement towards More Advanced Methods
  • Single vs. Multi-Level Bills of Materials (BOMs)
  • Understanding the Logic of the MRP and DRP Bill of Materials
  • The MRP and DRP Spreadsheets
  • The MRP Bill of Material Model
  • Variability in BOM Design
  • DRP BOM Model
  • The Complexity versus the Maintainability of the BOM
  • How Is BOM Management Software Different?
  • Functionality Often Missing from MRP, DRP, and APS Applications
  • Stocking/Destocking
  • Redeployment
  • Service Level-based Planning
  • Conclusion

Chapter 11: Supply Planning Visibility and Master Data Management

  • Background
  • System Visibility in Supply Planning Systems
  • Effective Parameter Management
  • How Different Applications Approach Lead-time Setup and Maintenance
  • Leads Times in SAP SPP
  • Lead Times and SAP SNP
  • Conclusion

Chapter 12: Understanding the Difference Between Production versus Simulation

  • Equal Simulation Capabilities?
  • Aggregation Considerations
  • Conclusion

Chapter 13: Conclusion

  • Introduction
  • The Importance of History to Decision Making
  • The Importance of Full Understanding
  • Simulation
  • Combining the Methods
  • The Practice of Supply Planning
  • The Future

Questions about the Book? 

Do you have any questions about the book? If so please comment below, and we will address your questions.

  • […] Many smaller companies would like to access better planning capabilities, but don’t have the money to be hire and be ripped off by large vendors and large consulting companies. In fact they may not be able to afford a traditional implementation even if they were to somehow find a good smaller consulting company. They also don’t have the funding to support continual upgrades, troubleshooting and so on. Some smaller companies that have implemented planning software often find they don’t have the stomach to continually maintain the system, and the system generally falls into disrepair, with the planners increasingly relying upon spreadsheets. These are perfect candidates to have their planning outsourced. Because the concept of outsourced supply chain planning is valid, and we have the expertise and a fully operational solution, we investigated the history of outsourced supply chain planning misfires, and decided to start an outsourced supply chain planning service. We are confident of our ability to produce better results than internal planning departments, and we already have a customized solution that has served us well and been thoroughly tested in multiple consulting engagements. As opposed to a new implementation, our solution is up and running, and just requires data population. It’s hard to say how long this will take to gain popularity, but it will be a very interesting process no matter what happens. a Conclusion a Outsourced supply chain planning, while a very good concept, was attempted by some of the largest companies in the industry. They failed. This is a good thing as their value added to planning would have been negligible, but their costs would have been very high. If they had been even partially successful, it would probably have left outsourced supply chain planning with a bad reputation. a The trick to doing this is that one must be able to reduce costs by eliminating all implementation and maintenance costs, while providing planning functionality which the client cannot access because they lack the software, or they cannot get working properly in the software that they do have. Of course, the client’s costs must also be reduced through superior planning results, and thereby making the company’s supply chain more efficient. Business history shows that to get people to do things differently, the value proposition must be a “slam dunk.” This is very much like Netflix versus Blockbuster. In the beginning, people were skeptical of Netflix’s business model. However, Netflix had such a strong supply chain advantage over Blockbuster and better value (lower prices, better selection, less effort, better customer service), that people became comfortable with the concept. a The current thinking is that companies must perform their own planning, so for them to move to a place where they will allow someone else to do it, both the costs must be lower, and the planning results must be better. It’s unlikely it can be successful it is only one or another. References I cover the supply chain implications of Netflix’s business model in my book “Supply Planning with MRP/DRP and APS Software.” […]

  • […] I once sat through a MEIO vendor presentation, and the vendor was asked if their software was lean. The vendor representative was clearly not comfortable with the question, and I did not blame him. Lean is quite a trend in companies right now and decision makers like to know that the software they buy will be consistent with lean principles. The problem with this desire is that no ERP, APS or MEIO software is lean. This is because Lean is a philosophy, not a systematic and controlled set of functionality that is designed to control a supply network. This is what supply planning systems are. However, there are some products that can be placed upon reorder point planning, which is extremely similar to Lean, and which can be read about at this post. I also cover this extensively in my book “Supply Planning with MRP, DRP and APS Software.” […]

  • […] the advent of internet shopping, a topic which I address in detail in my book “Supply Planning with MRP, DRP and APS Software.” Furthermore, online retailers are particularly well positioned to exploit the long tailed […]

  • […] client’s ability to implement optimization. This is very infrequently done. In my book “Supply Planning with MRP, DRP and APS Software,” I describe how to analyze the actual costs and benefits to your company from […]

  • […] Interestingly, I have never heard of this discussed as a use for Lean. However, Lean has very little value in supply planning in practical terms. Lean can dovetail with reorder point planning, which can be effective for products that are either very erratic in their demand history or very stable as is discussed in more detail in my book “Supply Planning with MRP, DRP and APS Software.” […]

  • […] or reorder point planning (I connect Lean to reorder point planning in detail in my book “Supply Planning with MRP, DRP and APS Software.”) Lean essentially is against using supply planning methods (although they tend to focus […]

  • […] positions internally. However, on the converse I have found, and discuss this in my book “Supply Planning with MRP, DRP and APS Software,” that I have yet to see a really effective knowledge transfer job performed by a consulting […]

  • Excellent, I see the chapter of this book and nothing to say but looking forward to read it. As an abaper I do al recommend your book, I am waiting to finalize the whole book and I will post a good review in sap press.

  • David Alzate says:

    Hi shaun,
    After reading your SAP Discover Book, I would like to know if you have any further information about how the optimizer of vehicle scheduling works. It is for this reason It seems your book will be really helpful to me. Finally, If you are requring a help for coding in MATLAB or ABAP, don’t hesitate in asking me a hand for your book.

    • Shaun Snapp says:


      I really don’t. I have never been at an account that implemented TP/VS. All the effort that SAP has put into TM (making a product that can be used completely independently from APO) does not seem to be making a dent in the marketplace. There is actually quite a big demand for TMS software, but SAP never seems to have been able to get the formula right. Unfortunately, I need to actually get onto projects that have modules before I can write articles on them.

      Thanks for the offer of ABAP and MATLAB assistance. I proposed MATLAB for use as an external simulation environment on several articles as you may know, but I have not been contacted on this topic by any client. Simulation continues to be a problematic area for companies, and external simulation, or simulation outside of APO or spreadsheets on SAP accounts is still extremely rare. Or should I say, I don’t seem to run into it, and people look at me strangely when I recommend the concept.

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