Performance Measurement with KPIs

The APO key performance indicators (KPIs) express abstract supply chain objectives in financial or
physical units for comparative purposes. Data pertaining to the various planning and execution
processes such as demand planning or production scheduling is collected, measured, and
transformed into physical or financial information that can be used to compare results and thus
measure performance. The data is stored in the Business Information Warehouse (BW). APO KPIs
include some SCOR metrics and some that have been developed by SAP. KPI queries pull actual
and historical performance data from the BW for viewing in the Cockpit.
APO KPIs are general purpose measurements that can be used as a framework for gauging
performance effectively. They provide the necessary structure and set the direction for
improvement. You can access the following types of KPIs:

quality/service
production control
supply chain flexibility
inventory control
supplier performance
human resources

Prerequisites

Connect to SAP BW 1.2B or higher (APO Customizing)

Define RFC destination (APO Customizing)
Maintain context menu profile (APO Customizing)
Install BW Frontend
Fulfill BW prerequisites for R/3 data extractors
Install corresponding R/3 modules (for example, HR must be installed for KPI: Headcount)
KPI queries are addressed by their workbook IDs. Any changes in queries must also be
changed and saved in the same workbook
In the case of some KPIs, for example, the Inventory Days of Supply KPI, material types
are defined as filter values. Changes must also be made and saved in the same workbook

Process Flow
The performance measurement process is an ongoing one in which performance results are
continuously compared and analyzed in order to determine whether your business is on or off target
in meeting its goals. General performance measurement consists of the following procedures for
each performance cycle. Cycles include procurement, manufacturing, and distribution.
Define a strategic supply chain vision
Define executive level measures for each objective
Establish managerial level objectives that align with executive ones
Establish targets for defined metrics through benchmarking
Measuring supply chain performance in APO can be achieved by following the cycle illustrated
below:

1. View current performance results by launching KPI queries from the SCC. KPI queries pull
actual and historical performance data from the Business Information Warehouse (BW) for
viewing in the Cockpit.
2. Review the data and compare it to your current plan.
3. Identify those areas in your performance cycles that need improvement and set targets for
the upcoming round. Performance cycles include procurement, manufacturing, and
distribution.
4. Adjust the planning process wherever necessary.
5. Perform planning process in planning system (APO.)
6. Execute plan in execution system (for example,R/3).
7. View performance results (step 2).
8. Start the cycle again. Revisit on a routine basis

Result
By following this cycle you will be able to maintain a basic perspective of the dynamics of your
organization and ensure your supply chain operations are working effectively. Remember that
results must be viewed in relationship to each other. An improvement in one area may mean a lapse
in another. For example, a decrease in production costs might inadvertently cause decrease in
customer service, and thus would not be an improvement.

The use of metrics to measure performance is a complex business process that requires careful
planning, analysis and a thorough knowledge of the supply chain. For more information on
measuring supply chain performance, see the following topics:
The SCOR Model

The SCOR Model

APO KPIs were developed according to the Supply Chain Operational Reference (SCOR) model,
the standard reference process model developed by the Supply Chain Council (SCC) that has
become the cross-industry standard for supply chain management. (See Acknowledgements at
end of topic.)
The SCOR model depicts the basic supply chain, ranging from supplier's supplier to customer's
customer, as a series of linked Source Make Deliver execution processes managed by a
series of planning processes.

The SCOR model's supply chain

1998 Supply Chain Council

The SCOR model describes:

standard management processes

relationships between standard processes

standard metrics to measure process performance

management practices that produce best-in-class performance

Performance and diagnostic metrics together drive performance improvement. To evaluate supply
chain performance, the SCOR model advocates a set of measurements comprising a combination
of the following metrics:
cycle-time (production cycle time and cash-to-cash cycle)
cost (cost per shipment and cost per warehouse pick)
service and quality (on-time shipments, defective products)
asset (inventories)
Example of SCOR metrics
The following table defines the top level SCOR processes and supplies the corresponding metrics
used to measure performance in each area.
Level 1 SCOR management processes and equivalent metrics
SCOR
Process

Definition

Plan

Processes that balance

aggregate demand and
supply to develop a
course of action which
best meets established
business rules

Functions

Metrics (KPIs)

Demand/supply planning:

Demand and shipment

forecast accuracy

Assess supply (categorization)

Adherence to plans
Prioritize demand
Inventory turns
Plan inventory, distribution,
production, material and capacity
for all products and channels

Planning cycle time

Manage planning infrastructure:

Decide to make or buy
Configure supply chain
Plan long-term capacity and
resources
Phase products in/out
Manage product line

Source

Processes that procure

goods and services to
meet planned or actual
demand

Material acquisition:

Procurement unit costs

Obtain, receive inspect, hold,

issue material

Vendor lead times

Materials quality

Manage sourcing infrastructure:

Materials inventories
Manage vendor contracts,

payments, certification and

feedback
Control sourcing quality
Engineer components

Make

Processes that transform

goods to a finished state
to meet planned or actual
demand

Production Execution:

Production costs

Request/receive material

Product quality

Manufacture/test product

Changeover items

Package/release product

Capacity utilization

Manage make infrastructure:

Manage facilities/equipment
Track production status
Control production quality
Schedule operations
Plan short-term capacity

Deliver

Processes that provide

finished goods and
services to meet planned
or actual demand

Order management

On-time shipment

Warehouse management

On-time delivery

Transportation management

Order fulfillment time

Distribution management

Returns

Benchmarking Techniques
Performance targets are set using one of the following methods, or a combination:
Historical benchmarking is the most common and easiest method to implement since the
targets are based on historical baseline levels. Baseline measures attempt to establish the
current performance level of a company, product, process, etc. and should be established
before improvement activities are initiated. For example, a company that currently has an
order fill rate of 90% might set its performance target at 95%.
Internal benchmarking is the most popular approach. In this method, comparable
departments, products, facilities are measured within a company, with a separate set of
metrics being used for warehousing, manufacturing, customer service, etc. The best-ofclass is determined in each area and their metrics are used as a basis for establishing
performance targets for the others.

External benchmarking is the most difficult method since it involves collecting performance
data from other companies. This method is usually accomplished with external professional
help.
Theoretical target-setting involves a company-wide analysis to determine how supply chain
performance could theoretically be improved. The performance targets are based on
estimates generated during the analysis. This method is far from easy to perform because
only a very thorough analysis can determine how a decision will impact various aspects of
the supply chain. However, this method is the surest way of developing a balanced set of
metrics.

Acknowledgements
Introduction
This Supply Chain Operations Reference-model (SCOR) has been developed by the Supply-Chain
Council (SCC) as the cross-industry standard for supply-chain management.
The SCC is an independent, not-for-profit trade organization dedicated to the development,
promotion, and support of SCOR as the cross-industry standard.
SCC operations and SCOR maintenance are funded by member dues. Members receive several
important benefits, including six-month lead time on access to the most recent release of SCOR,
discounts to attend SCC conferences, and membership on SCC Technical Committees that manage
SCOR development and maintenance.
To join the SCC, please submit the application form available on the SCCs Web site at www.supplychain.com.
History
The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and Advanced
Manufacturing Research (AMR), consisting of 73 founding member companies.
PRTM and AMR led the original SCC in developing the SCOR model, publishing SCOR Release
1.0 on November 12, 1996.
The contributions and hard work of all original founding SCC members is gratefully acknowledged
by all who use SCOR today.
The SCC was formally incorporated as non-for-profit trade organization in Pennsylvania in June
1997.
Requested Acknowledgements
All who use the SCOR model are asked to acknowledge the SCC by placing these
acknowledgements at the front of any documents describing or depicting the SCOR model and its
use.
All who use SCOR are encouraged to join the SCC, to both further model development and obtain
the full benefits of membership.

Supply Chain Performance Measurement

This SCC function allows you to track and measure your supply chain performance by retrieving
information stored in the Business Information Warehouse (BW) pertaining to your business.
Performance measurement is a way to determine if your business has improved or not. The APO
KPIs are metrics that measure your company's performance in specific areas. For example, a KPI
could tell you what percent of your products were damaged during production. Based on that
information, you could set a goal to reduce the percent of damaged goods by 5%. After
implementing the steps necessary to reach the goal, you would again launch a KPI query to check
your progress.

Integration
Key performance indicators are stored in the BW. They can be accessed from APO by launching
KPI queries from the Supply Chain Cockpit. The results are displayed in graphs, tables, etc. on
Excel sheets.

From APO, the information is retrieved through remote function calls (RFCs). The system
infrastructure is illustrated below:

System infrastructure for KPIs

Prerequisites
Data being transferred between the various systems MUST have the same name throughout. For
example, product M1 in APO must have the same ID as it does in R/3 because BW data is R/3based. To avoid the types of inconsistencies depicted in the examples below, when new objects are
created in APO, they should be named according to the naming conventions described in the APO R/3 Integration documentation. LINK Core Interface (CIF) Pre-settings.
Business Information Warehouse data is R/3-based!! It is not based on the model created in
the Supply Chain Engineer.
APO objects are identified by GUIDs, but in the BW they have the same name and ID as they do in
R/3 which can lead to problems. For example, if a plant is already named 0001 in R/3, but is called
1000 in APO, no data selection for that plant will be available in BW when a query is launched from
APO for Plant 1000. That data is stored in BW under Plant 0001.
APO BW R/3
Plant: 1000 Plant: 0001 Plant: 0001
The number of characters in a name varies in APO and BW. The following lengths are allowed in
BW (Release 1.2B; subject to change):
Product: 18
Plant, Distribution Center: 4

Customer 10
Supplier: 10
Resource: 8
Problems will also occur if a name that is used in R/3 is randomly assigned to an object in APO.
Consequently, the name appears in both systems but refers to completely different objects. Again, if
a KPI query is launched from APO, the data retrieved from BW will pertain to the R/3 object, not the
APO one.
APO BW R/3
Plant: 1000 Plant: 1000 Plant: 1000
Automatic mapping:
In R/3, for example, the term customer applies to a variety of roles. In BW, three of those roles are
used:

sold-to party
shipped-to party
payer

In APO, the term Customer refers to shipped-to party; however, when a Customer data transfer
takes place between APO and BW, the system automatically maps the relevant data to all three
customer roles in BW.

Activities

Determine what performance cycles you want to track and include the corresponding KPIs
in your SCC context menu. Call up those KPIs at regular intervals to analyze your actual
and historical performance data. After you analyze the data and set targets for
improvement, you can adjust your plan in APO and run the corresponding optimizer. Next,
you execute the plan in your execution system, for example, in R/3. The cycle is repeated
when you call up the KPI again to see the results of the execution of the plan. Basically,
there are three steps to improving supply chain performance using the Supply Chain
Performance Monitor:
o
o
o

Plan and optimize in APO

Execute decisions in an execution system (R/3)
Benchmark in BW

To launch a KPI query from the Supply Chain Cockpit, open the SCC work area folder
containing the object you wish to retrieve data on. Expand the list and locate the object.
Click on the object with the right mouse button. The KPI context menus appear. Double
click on the KPI to retrieve it from the BW planning book and display it for viewing.

KPIs are stored in workbooks in the BW. When you call up a KPI from the Supply Chain
Cockpit, the system retrieves the data from BW and displays it in the form of an Excel
sheet.

The use of metrics to measure performance is a complex business process that requires careful
planning, analysis and a thorough knowledge of the supply chain.

Maintaining Context Menus

The Supply Chain Cockpit allows you to manage the knowledge and information assets of your
business organization. It is a tool for global information aggregation. You can use it to:

access up-to-date data on all APO planning objects by launching queries

measure your business perfomance using key performance indicators (KPIs) that are
stored in the Business Information Warehouse (BW).

In order to make it easier to gather information, you can customize the cascading menus that are
attached to the APO planning objects. You can create the following types of menus:
APO query (planning data in the APO system)
BW KPI (actual performance data stored in BW)

Example
As a supply chain planner you may want to have quick, regular access to specific data such as
customer service to help you track the status of your plan and measure performance.You could
create the following context menu for the service KPIs:

Prerequisites
You must have maintained a working APO model containing master and transactional data on
products, PPMs, locations, resources and transportation lanes.
Access to the Business Information Warehouse (BW) for KPIs. You must define a BW destination in
APO Customizing step: Define BW destination.

Procedure

1. Access APO Customizing via the SAP Easy Access menu: Tools Business Engineer
Customizing.
2. Choose SAP Reference IMG APO Implementation Guide APO Supply Chain
Cockpit (SCE).
3. Complete the following Customizing steps:
Define default BW destination (RFC)
Maintain SCC context menu
Define default context menu profile
If you do not define your own context menu profile as the default, then the standard SAP
context menu will appear on the SCC screen. You must also the default context menu in the
SCC user settings.
For more information on this topic, see Maintaining SCC User Profile

Key Figures in Demand Planning Explained

Demand Planning has a number of key figures that are used for separate, quite specific purposes:
Historical Input - You enter the historical input key figure in the univariate forecast profile. The
historical input key figure is the one whose actual data is used to calculate the forecast.
You see the historical input key figure, sometimes called the orders history, in the univariate forecast
view.
The key figure is taken from either an InfoCube or the LiveCache
Original History - The original history is almost the same as the historical input key figure, but with
two possible adjustments:

The system adjusts the historical input values as per the phase-in profile if the following
conditions are fulfilled:
o From the master forecast profile, you have created a phase-in profile.
o From the master forecast profile, you have maintained the basic settings of the
phase-in profile; that is, you have assigned characteristics to the profile.
o From the master forecast profile, you have assigned characteristic values to the
phase-in profile.
o The time range of the profile falls within the historical forecast horizon of the master
forecast profile.
o You have specified that the phase-in profile affects historical data. In the
maintenance of forecast profiles choose Goto Phase-in/out profiles Settings.
o You have selected Material fcst in the master forecast profile.
o To create the forecast, you use a univariate forecast profile.
The system adjusts the historical input values as per the phase-out profile if the following
conditions are fulfilled:
o From the master forecast profile, you have created a phase-out profile.
o From the master forecast profile, you have maintained the basic settings of the
phase-out profile; that is, you have assigned characteristics to the profile.
o From the master forecast profile, you have assigned characteristic values to the
phase-out profile.

o
o
o
o

The time range of the profile falls within the historical forecast horizon of the master
forecast profile.
You have specified that the phase-out profile affects historical data. In the
maintenance of forecast profiles choose Goto Phase-in/out profiles Settings.
You have selected Material fcst in the master forecast profile.
To create the forecast, you use a univariate forecast profile.

This results in the original history. The original history is displayed in interactive demand planning if
you have included an actuals row for the historical input key figure in the planning book. The original
history is not stored in the planning area. It is the historical input key figure that is stored in the
planning area.
If neither of the above situations exists in your system, the historical input and the original history
are the same.
Corrected History - Key figure in which the history that has been corrected by the system or
manually by the user is stored.
You can correct history (see steps 2 and 3 below) without storing it in this key
figure. The corrected history is then displayed in an auxiliary row in the statistical
forecast view and cannot be saved. This has no significant performance
disadvantages.
If you set the Read corrected history data from planning version indicator, the system uses the
corrected history as the basis for the forecast, and not the key figure you entered for historical input
in the univariate profile.
Only use this setting if you have corrected the historical data manually. The system
automatically takes other effects such as phase-in/out profiles and outlier correction
into account. Setting the indicator would then result in such correction being applied
each time you execute the forecast. See also note 333565.
Do not use the corrected history key figure if you use either of the functions in the
univariate forecast profile that correct history to account for promotions.
The corrected history key figure is made up as follows:
1. The system takes the original history as the starting point.
2. If you have entered a value in the Days in period field in the univariate forecast profile, the
system adjusts the corrected history key figure based on this average. For a detailed
explanation, see the F1 Help of the field.
3. If you have selected Outlier correction in the univariate forecast profile, the system corrects
the historical values that it determinesbased on the sigma factorto be outliers.
Historical value markings are also taken into account. See also Outlier Correction.

Use
You base the forecast on the corrected history key figure if you wish to correct history manually. The
prerequisites are:
In the planning area, you have included a key figure to hold corrected history.
In Customizing, you have defined which key figure in your planning area is to hold corrected
history and have assigned it to the baseline forecast key figure.
In the univariate forecast profile, you have specified that the forecast should be based on
the corrected history key figure by selecting Read corrected history data from planning
version.

In the univariate forecast profile, you have specified how you want history to be corrected
(Days in period and/or Outlier correction with or without Historical value markings).
If you wish to see the corrected history key figure in interactive demand planning, you have
included a row for it in the planning book and data view.
If you use the history of a "like" product to create the forecast, the system bases the
forecast on the original history. It does not read the corrected history of the "like"
product. It applies any corrections you have specified (Days in period, Outlier
correction, Historical value markings and/or promotion corrections) to the original
history.

Original/Baseline Forecast - The original forecast, sometimes known as the baseline forecast, is
the key figure to which the original forecast results are written. In addition, any existing phase-in
profile and/or phase-out profile is applied to the original forecast.

The system adjusts the original/baseline forecast values as per the phase-in profile if the
following conditions are fulfilled:
o From the master forecast profile, you have created a phase-in profile.
o From the master forecast profile, you have maintained the basic settings of the
phase-in profile; that is, you have assigned characteristics to the profile.
o From the master forecast profile, you have assigned characteristic values to the
phase-in profile.
o The time range of the profile falls within the future forecast horizon of the master
forecast profile.
o You have selected Material fcst in the master forecast profile.
o You have specified that the phase-in profile affects historical data. In the
maintenance of forecast profiles choose Goto Phase-in/out profiles Settings
o To create the forecast, you use a univariate forecast profile.

The system adjusts the original/baseline forecast values as per the phase-out profile if the
following conditions are fulfilled:
o
o
o
o
o
o
o

From the master forecast profile, you have created a phase-out profile.
From the master forecast profile, you have maintained the basic settings of the
phase-out profile; that is, you have assigned characteristics to the profile.
From the master forecast profile, you have assigned characteristic values to the
phase-out profile.
The time range of the phase-out profile falls within the future forecast horizon of the
master forecast profile.
You have selected Material fcst in the master forecast profile.
You have specified that the phase-out profile affects historical data. In the
maintenance of forecast profiles choose Goto Phase-in/out profiles Settings.
To create the forecast, you use a univariate forecast profile.

Use
1. When you create the planning area, you include a key figure for the original forecast.
2. If you use any of the following key figures, you assign them to the Forecast key figure in
Customizing for the planning area:
o
o
o

Corrected history
Corrected forecast
Ex-post forecast

Ex-post multiple linear regression

1. You enter the original forecast key figure as the Forecast key figure in the master forecast
profile.
2. If you do promotion planning, you enter the original forecast key figure as the Planning key
figure on the Planning area tabstrip in the promotion planning workspace.

Corrected Forecast

- The corrected forecast key figure is made up as follows:

1. The system takes the original forecast as the starting point.

2. If you have entered a value in the Days in period field in the univariate forecast profile, the
system adjusts the corrected forecast key figure based on the actual number of workdays in
each period. For a detailed explanation, see the F1 Help of this field.

Use
The prerequisities for using the corrected history key figure are as follows:
In the planning area, you have included a key figure to hold the corrected forecast.
In Customizing, you have defined which key figure in your planning area is to hold the
corrected forecast and have assigned it to the baseline forecast key figure.
In the univariate forecast profile, you have made an entry in the field Days in period
If you wish to see the corrected forecast key figure in interactive demand planning, you
have included a row for it in the planning book and data view.
You do not need a corrected forecast key figure for promotion planning.
Promotion - The system stores a promotion as an absolute number in the promotions key figure. If
you define your promotion as a percentage, the system converts the percentage to an absolute
number before storing it.

Use
The prerequisites for using the promotion key figure are as follows:
1. When creating the planning area, you have included a key figure for promotions.
2. If you wish to release the sum of the unpromoted forecast and the promotion, that is the
promoted forecast, to Supply Network Planning, you have included in the planning area a
key figure to contain the total.
3. If you wish to see the promotion key figure in interactive demand planning, you have
included a row for it in the planning book and data view.
4. If you wish to see the sum of the unpromoted forecast and the promotion in interactive
demand planning, you have written a macro that adds the two together and displays them
in a third row of the planning book data view. This row can be the key figure you defined in
step 2.
5. If you wish to release the sum of the unpromoted forecast and the promotion to Supply
Network Planning, you have written a macro that adds the two together and stores the
results in the key figure you created in step 2 during the transfer process.
6. If you wish to correct history to take account of past promotions, you have made the
necessary specifications in the univariate forecast profile.
This step is optional. It does not affect the planning of future promotions.

7. You have maintained the promotion key figure for the planning area by choosing Demand
Planning Planning Promotion Maintain Promotion Key Figures from the SAP Easy
Access menu.
8. In the workspace on the Promotions Planning desktop, you have entered the original
forecast key figure as the Planning key figure and have specified the Promotion key figure
on the Planning area tabstrip.
For more information, see Creation of Promotions.

Viewing KPIS with a BW Front End

You can use the Business Explorer to do reporting in Demand Planning.

Prerequisites
1. You have access to an APO system with the latest frontend.
2. The Business Analyzer and the Business Explorer are installed on your PC.
3. If you are using the Business Analyzer, you have created queries/reports in the required
InfoCube.
4. If you are using the Business Browser, you have queries/reports in an InfoCatalog.
The Analyzer and Explorer can both be used to view the results of the query.

Activities
Using the Business Analyzer to Create a Query
1. Access the Administrator Workbench in APO.
2. Choose Tools Business Content Query Objects.
The Activation of queries, variables and key figures dialog box appears.
3. Make the following entries:

4.
5.
6.
7.

Type

Select the value VAR (variables)

InfoCube

(leave blank)

Technical name

(leave blank)

Confirm your entry.

Start the Business Analyzer.
Create a query on the required InfoCube.
Select the query to view the results in the Business Analyzer.

Using the Business Browser to View a Query

1. Start the Business Analyzer.
2. If you have not already saved the query to an InfoCatalog, do this now.

a. General tab
Select option

Add as new workbook

Save as

Enter a name

b. Access on InfoCatalog tab

Select

Save in (private) user favourites OR

Save in (public) enterprise catalog

3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Access the Administrator Workbench in APO.

Select the InfoCatalog tab.
Select the Channel InfoCat tab.
Create a channel.
Select the User channel assignment tab.
Assign a user to the channel.
Select either the Enterprise InfoCat or Favorites tab.
Assign reports/queries to the channel.
Open the Business Browser.
Select the required query.

See also:
Building an InfoCube based on a Planning Area
Reporting on Data in a Planning Area.