SAP Advanced Planning and Optimization (SAP APO) promotion planning is particularly useful in understanding the impact of promotions in your normal statistical forecast and segregating it from a stand-alone forecast. This helps you to better model the forecast accuracy. It also helps in keeping the processes of baseline forecasting and promotion planning completely separate. In a real scenario, both statistical forecasting and promotions planning functions could be handled by two different departments—for example, statistical forecasting done by regional planners and promotion planning handled by the sales or marketing department.

Figure 1 shows a sample trend of price variations of demand for a product. It shows how sales are influenced by periodic price discounts of 50, 10, and 30 percent. Promotion planning helps you to understand fluctuations in demand based on promotions and accordingly to model the behavior.

Figure 1

The effect of price discounts on product demand

Business Scenario

Consider an example of an electronics manufacturer that manufactures and sells multiple models of televisions around the globe. For my business scenario in this article, the company has two existing models (MODEL1 and MODEL2) and is planning to launch a new model of the television (MODEL3). However, all three models cater to the same customer segment, and the introduction of a new model might have an impact on the existing models. Therefore, this also needs to be planned by the business.

Figure 2 shows the business scenario discussed above. I also describe other scenarios highlighting different situations and how to map them within the system.

Figure 2

A sample business scenario

Prerequisites to Carry Out Promotion Planning

Before using promotion planning, you need to set up important Demand Planning (DP) objects. I assume that the reader knows how to set up master data in SAP APO and how to configure basic DP objects. For this article, I explain the major DP objects, highlighting configurations specific to promotion planning.

Master Planning Object Structure (MPOS)

The MPOS is created via transaction code /SAPAPO/MSDP_ADMIN. For the example discussed in this article, the MPOS contains Location, Product, Product Group, Customer, and Country/Market as shown in Figure 3.

Figure 3

The MPOS

Planning Area

A planning area is created via transaction code /SAPAPO/MSDP_ADMIN. Note that the planning area contains a key figure related to promotion (9APROM1 Promotion 1) as shown in Figure 4, which will be used to carry out promotions in a later section of the article. To carry out promotion planning, you need to ensure that there are at least two key figures, one for storing the forecast and another for the promotion.

Figure 4

The planning area

Planning Book

A planning book is created via transaction code /SAPAPO/SDP8B. Note that while creating a planning book, you need to select the Promotion check box as shown in Figure 5. Selecting this check box provides you with the option to carry out promotion planning in an interactive planning book, which I discuss later in the article. Note that selecting the Univariate check box is not mandatory for carrying out promotion planning.

Figure 5

The main screen of the planning book

All the key figures present in the planning area as shown in Figure 4 are assigned to a data view, as shown in Figure 6. In Figure 6, note that all the key figures on the right side are grayed out, but the ones on left side are active, indicating that these key figures are assigned to the Data View. (In the first name, CFM Adjusted Customer Forecast, CFM stands for Customer Forecast Management and is the name of key figure used in this article.)

Figure 6

Key figure assignment to a data view

Configuration Specific to Carrying Out Promotion Planning

After defining the prerequisite steps, I show the configuration specific to carrying out promotion planning in SAP APO.

Maintain a Promotion Key Figure

To define a promotion key figure, execute transaction code /SAPAPO/MP33. In the screen that the system displays (Figure 7), enter the name of the planning area (ZPA), the Promotion Key Figure (9APROM1), and the characteristic for the promotion level (9AMATNR). 9AMATNR is the technical name for the product. Promotion level is the level at which you decide, for instance, if you want to plan promotions for a product or a location. This is the lowest level on which you can plan. Click the save icon. In my example, I introduce a new model of TELEVISION (MODEL3), so I use it as the characteristic on which promotion planning is carried out.

Figure 7

Maintain the promotion key figure and level

Maintain a Promotion Base

A promotion base forms the basis for similar promotions. It specifies the characteristics that are to be used for planning promotions. It helps to carry out planning at a detailed level and also makes it easy to identify the effect of individual promotions.

To define a promotion base, execute transaction code /SAPAPO/MP40. In the main screen, enter the name of the planning area (ZPA) and then click the create icon as shown in Figure 8.

Figure 8

Create a promotion base

In the next screen (Figure 9), enter the details highlighted in the red box and then click the save icon. Here you create a promotion based on a customer, and the time horizon is between January 2016 and March 2016.

Figure 9

Enter details to define a promotion base

After you click the save icon in Figure 9, a pop-up message appears (Figure 10). Click the Yes button.

Figure 10

Promotion base defined

Cannibalization Groups

A cannibalization group is used to model the effect of promotions on similar products. In the example discussed in this article, all three models cater to the same segment. Therefore, the introduction of the new model might have a negative impact on the existing models. A single promotion has both a positive and negative influence on the sales of products from one cannibalization group.

To create a cannibalization group, execute transaction code /SAPAPO/MP32. This action displays the screen shown in Figure 11. Enter the name of the cannibalization group (GROUP1) in the Cannib. grp ID field and a name (Cannibalization Group 1)in the Description field. Next, you enter the three models into one group. For my example, the numbers indicate a reduction in the sales of one piece for MODEL1 and two pieces for MODEL2, and additional sales of five pieces for MODEL3. Therefore, a single promotion has a positive effect on MODEL3 and a negative impact on MODEL1 and MODEL2. After entering the details, click the save icon as shown in Figure 11.

Figure 11

Cannibalization group

Creating a Promotion

To create the promotions, execute transaction code /SAPAPO/SDP94. In the screen the system displays (Figure 12), select the planning book/data view (ZPB/ZDV) and then select the promotion planning icon.

Figure 12

Select promotion planning

In the Promotion in Interactive Planning screen (Figure 13), click the create icon to create a promotion. Enter the details for the promotion. Note that the promotion base (CUSTOMER) is assigned here and the Check cannibaliz. group (GROUP1) check box is also selected. The promotion Type is Absolute. Absolute is one of the options. Another option is Percentage. Selecting the Absolute option indicates that promotion values can only be numerical values and not percentages.

Figure 13

Promotion definition

In the bottom section of the same screen, enter details for the Periodicity, Number of Periods, Planning Version, and Planning Key Figure fields as shown in Figure 14.

Figure 14

Enter more details for the promotion

Click the save icon to save your data and display the next screen (Figure 15).

Figure 15

Assign the promotion to objects

Click the Assign Multiple Objects button. This action displays the screen shown in Figure 16.

Figure 16

Define objects to be assigned to the promotion

There is an option in Figure 16 to define the selection on which the promotion needs to be carried out. Click the Define button. Selection means the level on which the promotion needs to be carried out. In this example, you carry out the promotion at the location and product group level.

Enter the location (PLANT1) and product group (TELEVISION) as shown in Figure 17. Then press the Enter key.

Figure 17

Selection condition for objects for parameters for promotion

In Figure 18, click the Assign Multiple Objects button. This action assigns the selection (i.e., the location and product group that you defined in Figure 17) to the promotion.

Figure 18

Objects assigned to the promotion

Figure 19 has an option for specifying the value of the promotion. Note that in Figure 13 the type of promotion was specified as Absolute. Therefore, absolute promotion values are entered for January 2016 through March 2016 as 100, 200, and 300 at the Total level. Press the Enter key. The values are then disaggregated across the three models. Note that for my example, the ratio of values disaggregated among MODEL3, MODEL2, and MODEL1 is in the ratio of 5: (-2) :(-1). This was the same ratio that was specified in the cannibalization group in Figure 11.

Figure 19

Absolute promotion

Macro to Calculate the Adjusted Forecast

Now I create a macro that calculates the value of an adjusted customer forecast based on the values of the Promotion and Forecast key figures. To define a macro, execute transaction code /SAPAPO/ADVM (Figure 20).

Figure 20

Select a planning book to define a macro

Select the planning book/data view (ZPB). This action displays the screen shown in Figure 21.

Figure 21

Create a new macro

At the bottom of Figure 21, right-click Macros in the Macro Book. Select the Create New Macro option, and then click Add macro.

In the next screen, give the macro a name (Adjusted Forecast) and then click the Continue button shown in Figure 22.

Figure 22

Macro header

Define the macro that will calculate the value of the CFM Adjusted Customer Forecast key figure as the sum of the forecast and promotion key figures. To define the macro, drag and drop the elements on the left side, such as Planning table and Operator/function, into the Macros in the Macro Book section. (This section is in the red box on the left side of Figure 23.) The macro is defined as shown in the box enclosed in red in the lower right section of Figure 23.

Figure 23

Define the macro

Note the status of the macro is still red, which means it is inactive. To activate the macro, click the highlighted activate icon. This action displays the screen shown in Figure 24.

Figure 24

Macro activated

After macros are generated, messages at the bottom of the screen show that the macros are saved. The status changes to green. Finally, drag the Adjusted Forecast macro to the Default section as shown in Figure 24.

Figure 24 shows that the macro is assigned to Default. Assigning the macro to a default event means that macro is executed automatically when values are loaded in the planning book and changed or saved. Click the save icon to save your data. The macro is saved as shown in Figure 25.

Figure 25

Macro saved

Forecast Generation Including Promotion Planning and Results Interpretation

Now you need to load the data into a planning book. Execute transaction code /SAPAPO/SDP94. In the screen that appears, data is loaded for all three models (Figure 26). On the right side you can see that values of the promotion key figure are present, which are the same values that were entered in Figure 19. The value of the CFM Adjusted Customer Forecast key figure is the same as the Promotion1 key figure as there are no values present in the Forecast key figure. To carry out the forecast, click the statistical forecasting icon on the top left of Figure 26.

Figure 26

Statistical forecasting

The Forecast key figure is now populated (Figure 27). Note that value of the CFM Adjusted Customer Forecast key figure is changed and equals the sum of the Forecast and Promotion1 key figures as was defined in the macro. For example, the value of MODEL3 in January 2016 = 400+250 = 650, and the value of MODEL2 is February 2016 = 220-200 = 20.

Figure 27

Absolute promotion results

Percentage Promotion Type

In the above section, I created an absolute promotion type and the absolute values of the promotion were entered. There is alternate option to define percentage promotion types. For the percentage type, the same percentage of the baseline planning key figure is used at all aggregate levels. This means that you can only enter the percentage values for each period at the most aggregated level. It is not possible to change the percentages at lower levels.

To make the promotion as a percentage promotion type follow the same steps defined above to create the promotion. In the definition phase, select the promotion Type as Percentage, as shown in Figure 28. Also it is important to note that the cannibalization group does not work with the percentage promotion type, as shown by the pop-up message.

Figure 28

Percentage promotion

After you define the promotion as a percentage promotion type, when you enter the percentage values, you get an option to enter the percentage value only at the aggregate level, as shown in Figure 29.

Figure 29

Values at the aggregate level for percentage promotion

Values entered at the aggregate level are interpreted as percentage values. The calculation happens automatically at lower levels. For example, the values of 10, (-10), and 20 were entered for January 2016 through to March 2016. Values at the lower level are automatically calculated as shown in Figure 30. To interpret, for January 2016, 10 percent of 150 is 15, which is present for the Promotion1 key figure and so on in each month.

Figure 30

Values at the detailed level for the percentage promotion

When data is loaded for all three models, you can see the same values for the promotion as shown in Figure 30 are updated. The value of the CFM Adjusted Customer Forecast key figure is calculated as sum of the Forecast and Promotion 1 key figures as shown in Figure 31.

Figure 31

Percentage promotion results

Promotion Reporting

Promotion reporting gives you the option to generate reports on promotions and other key figures in a planning area. The output is generated in table form and can include data at both the detail and aggregate levels.

Maintain Settings for Reporting

To define promotion reports, you first have to make the required settings. To define the settings, execute transaction /SAPAPO/MP41A. In the screen the system displays (Figure 32), enter details of the Planning Book (ZPB), Data View (ZDV) and Version (000). Click the execute icon.

Figure 32

Header data for promotion reporting

In the next screen, enter a name (Test) and description of the report (Test Report) and click the icon shown in the upper left part of Figure 33.

Figure 33

Report detail

This action displays the screen in Figure 34.

Figure 34

Create the report

Click the create icon.

After you click the create icon, the New Detailed Report screen opens (Figure 35). Select the Promotion Base (CUSTOMER), enter a description (Promotion Report), and click the Maintain Detailed Report button.

Figure 35

Report details

This action displays the next screen (Figure 36) in which you enter 9AMATNR (APO Product) as the Drilldown Object 1 and click the save icon to save the report.

Figure 36

Report saved

Promotion Reports

To access promotion reports, execute transaction /SAPAPO/MP41B. In the main screen (Figure 37), click the Start Reporting button.

Figure 37

Promotion reporting

In the next screen (Figure 38), enter the name of the report you created in the above section (Test), select the Display Report radio button, and click the execute icon.

Figure 38

Execute the report

The detailed report is presented as shown in Figure 39.

Figure 39

Promotion report output

Promotion Management

Promotion management provides multiple options that help to make quick changes to several promotions at once. It consists of several functions that an administrator can use in the promotion environment.

To access promotion management, execute transaction /SAPAPO/MP42. In the main screen (Figure 40), a list of multiple options is available, such as Activate and Deactivate Promotions and Change Promotions. Note that the number of active promotions is 1, which means I have one active promotion in the system as of now (PROMOTION) that I created for discussion in this article.

Figure 40

Promotion management

For example, if you need to delete the promotion, select the Delete Promotions button. In the next screen (Figure 41), you see the promotion that is active in the system. Select the promotion and click the execute icon.

Figure 41

Select a promotion for deletion

A pop-up message appears asking if you want to delete the promotion. Click Yes, as shown in Figure 42.

Figure 42

Delete a promotion

A message shows that promotion has been deleted (Figure 43).

Figure 43

Promotion deleted

Alok Jaiswal

Alok Jaiswal is a consultant at Infosys Limited.

He has more than six years of experience in IT and ERP consulting and in supply chain management (SCM). He has worked on various SAP Advanced Planning and Optimization (APO) modules such as Demand Planning (DP), Production Planning/Detailed Scheduling (PP/DS), Supply Network Planning (SNP), and Core Interface (CIF) at various stages of the project life cycle.

He is also an APICS-certified CSCP (Certified Supply Chain Planner) consultant, with exposure in functional areas of demand planning, lean management, value stream mapping, and inventory management across manufacturing, healthcare, and textile sectors.

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