Supply Protection
What? Why? How?
Supply Protection
Supply Protection is a feature integrated into the Product Availability Check of Advanced Available To Promise (aATP), which helps to protect quantities for specific key channels, customers, market units, or any other group(s) defined by a combination of characteristics, in shortage situations.
Example: During special events or situations, companies often encounter a shortage because of unexpected demand changes, and supply protection will help protect quantities for key channels, customers, market units, or any other group(s) defined by a combination of characteristics in the shortage situations. Groups can be defined by a combination of the values of one or more characteristics like sold-to-party, delivery priority, customer group(s) ...etc.
The following picture illustrates the high-level core principles of how supply protection works. The demand element matching the supply protection group is restricted by higher or equally prioritized protection groups (Vertical Protection) within the same supply protection object. In addition, the demand must also respect the other non-matching supply protection objects (Horizontal Protection) for the same material plant combination.
Why Supply Protection
Selling everything with good margins is a crucial success factor. Companies want to avoid situations where key customers will not be fulfilled with the expected demand quantities because of shortages (Unexpected demand from other customers/channels or FIFO logic).
In the Fashion/Retail Industry, where wholesale demand generally comes in very early and consumes inventory, an inventory shortage occurs for the demand from other channels, eventually impacting the margins. Supply Protection can prevent the situation by restricting lower prioritized orders at the beginning of the season.
Advantages of Supply Protection
Process Flow
Common Use Cases
Protection for a Fashion Season
In the fashion industry, there are some typical challenges regarding order fulfillment based on inventory situations. The production is generally outsourced, and getting additional supplies on short notice is impossible. Big wholesale customers order huge quantities before the season starts, and there might be the risk that more quantities are needed for other channels with higher margins, like their own e-commerce channel or retail stores. On the other hand, selling everything and having no leftovers at the end of the season is also essential.
Stock for emergency cases
Customers want to establish stock for emergency cases where the emergency demand should be fulfilled by stock on hand and not from the future supply elements demand. Customers can use supply protection instead of building physical emergency stocks in this case.
The consumption of Protection is not the key concept of supply protection. It’s always the perspective of the restriction that is relevant. Some customers have set up a static-protected quantity that can’t get consumed, so they have a virtual safety stock. This Protection always restricts an ordinary sales order. In emergencies, the demand will get promoted to match a protection group with the highest priority, even higher than the safety stock group. In this case, customers can ensure on-hand stock for these emergency demands without needing physical emergency stock.
Other use cases
Many other use cases exist in all industries where companies have a physical stock that needs good distribution.
Scenario with Supply Protection and Without Supply Protection
A season without and with Supply Protection
Example: The Supply for a specific spring season article is 100 pieces. The order entry for wholesale starts early, while the retail stores need to catch up. The demand from the online channel only begins in spring. It might happen that wholesale has already taken the complete quantity, and nothing is left for retail and e-commerce channels. With Supply Protection, it is possible to protect a certain quantity for e-commerce (15 pieces with the highest priority) and retail (20 pieces with the second highest priority). This Protection might end at the end of the spring. The wholesale channel can’t take all the quantities at the beginning of the season, as it must respect the restriction of 35 pieces. Retail must respect the Protection of e-commerce, and e-commerce can take whatever is available. If retail and e-commerce don’t order the planned quantities, the Protection will expire, and wholesale can order these articles again.
Evolution & Roadmap
Future considerations
Supply Protection already has a good level of maturity. However, some features might improve the usage of supply protection.
Options in Restriction Logic
The default setting is “No Restriction by Own Protection.” This means that only parallel Protection and higher priority are treated as restrictions. Even if the demand is outside of the planning horizon, it is not restricted by other protected quantities.
Restriction by Own Protection
Restriction by Own Protection can have different flavors. One is “Restriction outside planning horizon,” and the other is “Restriction outside time bucket.”
A match from its characteristics but outside the planning horizon is also restricted by its own Protection. It’s not possible to take all quantities so that nothing is left to cover your own Protection.
Higher or equal priorities restrict a match. Own Protection is restricting the demand for all-time buckets outside of this demand.
Restriction outside planned Protection
Requests below the remaining Protection of a matching time bucket are restricted only by higher or equal priorities. Requested quantities exceeding the remaining Protection are additionally restricted by their own Protection for other time buckets and the Protection of lower priorities.
This setting has some advantages and is available with OP2023.
Frequently Asked Questions
How to avoid overprotection?
In general, it is important not to protect the full forecast but minimum quantities for important groups, and only time protection is important. It also makes sense to do protection vertically instead of heaving many horizontal supply protection objects. Some other settings are also helpful. “Restriction by own protection” or “Restriction outside planned protection” helps as even protected groups can’t consume too much without consuming their protection. Overprotection is self-healing to a certain extent if maintained in smaller time buckets. Time buckets can expire, and the unconsumed protection will no longer restrict other demands.
Can Supply Protection protect a season?
Protecting the early phases of the season makes sense to ensure that quantities are left for the important channels or customers. However, it also makes sense not to protect the end of the season to avoid leftovers.
Can I set up Supply Protection for segments?
The option to set up supply protection at a segment level has yet to be supported, and it is not available in the latest version of S/4HANA OP 2023. This option will come later. Using a segment’s value as an attribute for the protection group is impossible. These attributes are relevant to determining if a demand matches protection.
Is there an automation to set up Supply Protection?
Currently, there is no automation to set up Supply Protection. There are options to use APIs to set up Supply Protection (see Supply Availability Protection plan).
There is also the option to copy Supply Protection Objects, but there is no automation to retrieve protection quantities automatically from another system. The reason is apparent: Supply Protection is to protect minimum quantities rather than the complete forecast.
What happens with unconsumed protection?
Unconsumed protection expires once a time bucket expires. A time bucket expires if the end date of the bucket is in the past. These quantities are no longer restricting other demands.
Can a demand consume more than the protected quantities?
Supply protection intends to protect minimum quantities. Generally, the demand exceeds the protected quantities, and the supply is usually sufficient to provide the amounts requested. Demand can exceed the protection; therefore, the consumption of a one-time bucket can be more than the protected quantity. There is no automation to shift consumption that exceeds the protection of a time bucket into another time bucket. However, it is possible to do a shift like this via extensibility.
What are the differences between SUP and PAL?
Product Allocation and Supply Protection are complementary solutions. Product Allocation allows the definition of an upper limit. A Demand can’t exceed the defined quantity. Supply Protection works the other way around. Demand must respect the protection of others, but if there is enough stock available, there is no upper limit.
Can a demand also consume protection from other time buckets?
A matching demand is always consumed from the matching time bucket of the related protection group. There is no automatism to consume from the previous or next bucket. However, via extensibility, this distribution of consumption is possible. Consumption across different protection groups is not possible at all.
What document types of supply protection can be enabled?
Protection can be defined for document types like sales orders, STOs, Quantity contracts, scheduling agreements, and delivery free of charge. Future releases might consider additional document types.
How can I define protection groups?
Protection groups can be defined in supply protection objects by a combination of characteristics from the characteristics Catalog by leveraging up to two core characteristics and up to eight prioritized characteristics. Different catalogs are available for documents like sales orders and STOs.
What is horizontal and vertical protection?
Supply protection objects can be defined using both core and prioritized characteristics. If a supply protection object is set up using prioritized protection groups, it is also called vertical protection and only works within a supply protection object. Restrictions by other supply protection objects are generally referred to as horizontal protection.
Example: Two supply protection objects for the same material and plant combination are defined with core characteristics country and prioritized characteristics channel. One supply protection object for Germany and another for France has prioritized protection groups (1 = E-comm, 2 = Retail, 3 = Wholesale). Retail Orders for Germany must respect e-comm protection (vertical protection, aka prioritized protection) and the entire supply protection object (horizontal) from France.
Limitations
https://me.sap.com/notes/3275747
General settings
Supply Protection can be activated via transaction OVZ9 for every material/article.
Useful Links
What? Why? How?
Supply Protection
Supply Protection is a feature integrated into the Product Availability Check of Advanced Available To Promise (aATP), which helps to protect quantities for specific key channels, customers, market units, or any other group(s) defined by a combination of characteristics, in shortage situations.
Example: During special events or situations, companies often encounter a shortage because of unexpected demand changes, and supply protection will help protect quantities for key channels, customers, market units, or any other group(s) defined by a combination of characteristics in the shortage situations. Groups can be defined by a combination of the values of one or more characteristics like sold-to-party, delivery priority, customer group(s) ...etc.
The following picture illustrates the high-level core principles of how supply protection works. The demand element matching the supply protection group is restricted by higher or equally prioritized protection groups (Vertical Protection) within the same supply protection object. In addition, the demand must also respect the other non-matching supply protection objects (Horizontal Protection) for the same material plant combination.
Supply Protection illustration
Why Supply Protection
Selling everything with good margins is a crucial success factor. Companies want to avoid situations where key customers will not be fulfilled with the expected demand quantities because of shortages (Unexpected demand from other customers/channels or FIFO logic).
In the Fashion/Retail Industry, where wholesale demand generally comes in very early and consumes inventory, an inventory shortage occurs for the demand from other channels, eventually impacting the margins. Supply Protection can prevent the situation by restricting lower prioritized orders at the beginning of the season.
Advantages of Supply Protection
Process Flow
Supply Protection integrated into the Product Availability Check (PAC)
Common Use Cases
Protection for a Fashion Season
In the fashion industry, there are some typical challenges regarding order fulfillment based on inventory situations. The production is generally outsourced, and getting additional supplies on short notice is impossible. Big wholesale customers order huge quantities before the season starts, and there might be the risk that more quantities are needed for other channels with higher margins, like their own e-commerce channel or retail stores. On the other hand, selling everything and having no leftovers at the end of the season is also essential.
- With the help of supply protection, it is possible to protect quantities based on time buckets for the most important channels at the Product level. Less important demand must respect the amounts protected and can only consume the quantities if enough stock is left. The Protection can either be consumed by the actual demand of the important groups or can expire if the end date of the time bucket is in the past. End-of-season FIFO logic for demand consumption works again as per the standard design.
Stock for emergency cases
Customers want to establish stock for emergency cases where the emergency demand should be fulfilled by stock on hand and not from the future supply elements demand. Customers can use supply protection instead of building physical emergency stocks in this case.
The consumption of Protection is not the key concept of supply protection. It’s always the perspective of the restriction that is relevant. Some customers have set up a static-protected quantity that can’t get consumed, so they have a virtual safety stock. This Protection always restricts an ordinary sales order. In emergencies, the demand will get promoted to match a protection group with the highest priority, even higher than the safety stock group. In this case, customers can ensure on-hand stock for these emergency demands without needing physical emergency stock.
Emergency Cases Illustration
Other use cases
Many other use cases exist in all industries where companies have a physical stock that needs good distribution.
Scenario with Supply Protection and Without Supply Protection
Calculation of availability time series in PAC, including supply protection
A season without and with Supply Protection
Example: The Supply for a specific spring season article is 100 pieces. The order entry for wholesale starts early, while the retail stores need to catch up. The demand from the online channel only begins in spring. It might happen that wholesale has already taken the complete quantity, and nothing is left for retail and e-commerce channels. With Supply Protection, it is possible to protect a certain quantity for e-commerce (15 pieces with the highest priority) and retail (20 pieces with the second highest priority). This Protection might end at the end of the spring. The wholesale channel can’t take all the quantities at the beginning of the season, as it must respect the restriction of 35 pieces. Retail must respect the Protection of e-commerce, and e-commerce can take whatever is available. If retail and e-commerce don’t order the planned quantities, the Protection will expire, and wholesale can order these articles again.
Evolution & Roadmap
Future considerations
Supply Protection already has a good level of maturity. However, some features might improve the usage of supply protection.
- Transparency
The impact of supply protection is currently only visible in the context of a request. Within the “Review Availability Check Result” Screen, there is also a section explaining the impact of Supply Protection. However, seeing the restrictions in an availability view without this context would be helpful. - Overprotection
Overprotection can happen if horizontal supply protections block each other mutually. The combination of restrictions exceeds the availability in all cases. Here, getting some alerting to react to this situation would be good. - Analytics
Currently, Supply Protection doesn’t have analytics visualizing Protection.
Options in Restriction Logic
The default setting is “No Restriction by Own Protection.” This means that only parallel Protection and higher priority are treated as restrictions. Even if the demand is outside of the planning horizon, it is not restricted by other protected quantities.
No Restriction by Own Protection
Restriction by Own Protection
Restriction by Own Protection can have different flavors. One is “Restriction outside planning horizon,” and the other is “Restriction outside time bucket.”
- Restriction outside planning horizon (available since CE2202)
A match from its characteristics but outside the planning horizon is also restricted by its own Protection. It’s not possible to take all quantities so that nothing is left to cover your own Protection.
- Restriction outside time bucket (available since CE2202)
Higher or equal priorities restrict a match. Own Protection is restricting the demand for all-time buckets outside of this demand.
Restriction Outside Time Bucket
Restriction outside planned Protection
Requests below the remaining Protection of a matching time bucket are restricted only by higher or equal priorities. Requested quantities exceeding the remaining Protection are additionally restricted by their own Protection for other time buckets and the Protection of lower priorities.
This setting has some advantages and is available with OP2023.
- In the case of regular supply, all protected groups will also get the protected quantities.
- Higher priorities can‘t consume too much quantity.
- The risk of overprotection is reduced as every matching order reduces stock and Protection.
Restriction Outside Planned Protection
Frequently Asked Questions
How to avoid overprotection?
In general, it is important not to protect the full forecast but minimum quantities for important groups, and only time protection is important. It also makes sense to do protection vertically instead of heaving many horizontal supply protection objects. Some other settings are also helpful. “Restriction by own protection” or “Restriction outside planned protection” helps as even protected groups can’t consume too much without consuming their protection. Overprotection is self-healing to a certain extent if maintained in smaller time buckets. Time buckets can expire, and the unconsumed protection will no longer restrict other demands.
Can Supply Protection protect a season?
Protecting the early phases of the season makes sense to ensure that quantities are left for the important channels or customers. However, it also makes sense not to protect the end of the season to avoid leftovers.
Can I set up Supply Protection for segments?
The option to set up supply protection at a segment level has yet to be supported, and it is not available in the latest version of S/4HANA OP 2023. This option will come later. Using a segment’s value as an attribute for the protection group is impossible. These attributes are relevant to determining if a demand matches protection.
Is there an automation to set up Supply Protection?
Currently, there is no automation to set up Supply Protection. There are options to use APIs to set up Supply Protection (see Supply Availability Protection plan).
There is also the option to copy Supply Protection Objects, but there is no automation to retrieve protection quantities automatically from another system. The reason is apparent: Supply Protection is to protect minimum quantities rather than the complete forecast.
What happens with unconsumed protection?
Unconsumed protection expires once a time bucket expires. A time bucket expires if the end date of the bucket is in the past. These quantities are no longer restricting other demands.
Can a demand consume more than the protected quantities?
Supply protection intends to protect minimum quantities. Generally, the demand exceeds the protected quantities, and the supply is usually sufficient to provide the amounts requested. Demand can exceed the protection; therefore, the consumption of a one-time bucket can be more than the protected quantity. There is no automation to shift consumption that exceeds the protection of a time bucket into another time bucket. However, it is possible to do a shift like this via extensibility.
What are the differences between SUP and PAL?
Product Allocation and Supply Protection are complementary solutions. Product Allocation allows the definition of an upper limit. A Demand can’t exceed the defined quantity. Supply Protection works the other way around. Demand must respect the protection of others, but if there is enough stock available, there is no upper limit.
Can a demand also consume protection from other time buckets?
A matching demand is always consumed from the matching time bucket of the related protection group. There is no automatism to consume from the previous or next bucket. However, via extensibility, this distribution of consumption is possible. Consumption across different protection groups is not possible at all.
What document types of supply protection can be enabled?
Protection can be defined for document types like sales orders, STOs, Quantity contracts, scheduling agreements, and delivery free of charge. Future releases might consider additional document types.
How can I define protection groups?
Protection groups can be defined in supply protection objects by a combination of characteristics from the characteristics Catalog by leveraging up to two core characteristics and up to eight prioritized characteristics. Different catalogs are available for documents like sales orders and STOs.
What is horizontal and vertical protection?
Supply protection objects can be defined using both core and prioritized characteristics. If a supply protection object is set up using prioritized protection groups, it is also called vertical protection and only works within a supply protection object. Restrictions by other supply protection objects are generally referred to as horizontal protection.
Example: Two supply protection objects for the same material and plant combination are defined with core characteristics country and prioritized characteristics channel. One supply protection object for Germany and another for France has prioritized protection groups (1 = E-comm, 2 = Retail, 3 = Wholesale). Retail Orders for Germany must respect e-comm protection (vertical protection, aka prioritized protection) and the entire supply protection object (horizontal) from France.
Limitations
https://me.sap.com/notes/3275747
General settings
Supply Protection can be activated via transaction OVZ9 for every material/article.
Useful Links
- Supply Protection and Segmentation
- Supply Protection on the Level of the Storage Location
- Increasing Reliability with Supply Protection
- Unconsumed and Unconsumable Protection
- Restriction by Own Protection in Supply Protection
- Alerting Multiple Matches in Supply Protection by Using Situation Management
- Supply Protection and Fashion Quantity Contracts
- SAP Help Portal: Manage Supply Protection
- 3141787 - FAQ - Supply Protection (SUP) with advanced ATP
- SAP Managed Tags:
