How to Understand Supply Prioritization in CTM - Brightwork Research & Analysis

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Executive Summary

How does CTM work concerning supply and demand prioritization?
What is the downside to the sequential approach to allocation?
What is supply versus demand prioritization?

Background on CTP and Prioritization

There is an excellent point in the book “Real Optimization with SAP APO” regarding the limitations concerning CTM (capable to match). This highlights that while CTM can provide sophisticated demand prioritization, its order based approach does not consider the global view of how resources are used. This, of course, relates to supply prioritization. CTM can be considered to control both supply prioritization and demand prioritization. CTM is an order based supply planning process. The supply plan is created by layer after layer of orders until either all the orders are processed, or all inventory or capacity is allocated.

What is Supply Prioritization in SAP APO SNP CTM?

An excellent point is brought up by Kallrath and Maindl concerning supply prioritization:

“The downside of the sequential approach is of course the lack of a global view of the algorithm on the supply cain while solving the planning problem. This may cause conflicts in cause there are “single chain” products requiring processing on a particular, say fab resource and “multi chain” products that can be manufactured on a variety of such resources. If for instance CTM assigns an operation for fulfilling a high priority “multi chain” demand to this resource the operation will not be shifted to an alternative resource when during the same planning run CTM encounters a low priority “single chain” demand requiring processing on the same resource. The “single chain” demand may then be fulfilled late or not at all even though a global algorithm (such as optimization) would shift the “multi chain” demand to an alternate resource fulfilling both demands without violating the constraints…a common workaround is to plan “single” and “multi” chain products in consecutive planning runs, but then care must be taken regarding demand prioritization.” – Real Optimization with SAP APO

This quote means putting single and multi chain products in different CTM Profiles in SAP APO, and therefore separate runs. (to find out more about CTM Profiles, see this article) These profiles control both supply prioritization and demand prioritization. This is where CTM Profiles can be seen to control the prioritization. CTM Profiles are flexible in that multiple CTM Profiles can be created and applied to various product location combinations.

What This Means for CTM

However, this means that the customers would have to be copied between the two CTM Profiles. Clearly, as the desire for efficiency on the resource side increases vis-a-vis the desire for customer segmentation, CTM becomes higher maintenance and less desirable as a supply planning method.