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    Planning in supply chain management constantly faces new challenges

    The factors that influence the planning process are becoming increasingly complex. Time and again, inventory and inflows of goods and commodities have to be adapted quickly and effectively to fluctuating demand. This is especially true in uncertain times in which the economy is highly volatile and demand can change on short notice. Changing customer needs, varying numbers of consumers, price changes (including those of other goods), and new competing products are among the many factors that affect demand – and demand volumes – that companies have to include in their business planning.

    SAP Integrated Business Planning (SAP IBP), a cloud-based solution that runs on SAP HANA, is the state-of-the-art tool for supply chain planning in the world of SAP. In addition to quantity-based planning, it integrates financial KPIs into its optimization of the supply chain.

    The Excel front-end provides a familiar, user-friendly application environment that can be adapted and enhanced as needed. Simulations and scenarios enable supply chain planners to perform what-if analyses and compare different solution approaches – based not only on quantity, but also on value (in freely selectable currencies). The results of planning in SAP IBP are fully integrated with SAP S/4HANA and synchronized with enhanced planning.

    SAP IBP helps you make efficient decisions based on real-time data for the supply chain – from suppliers, production, and your own network all the way to your end customers.

    What exactly is IBP and what does it offer?

    SAP IBP has grown to include six different modules that support your company across the board in operational, tactical, and strategic planning:

    Integrated business planning for business departments

    • SAP IBP for Demand facilitates comprehensive demand planning across departments and companies, which serves as a basis for subsequent planning of logistics processes and inventory levels.

      Modern, state-of-the-art forecasting methods (ARIMA models, gradient boosting), time series analysis, ABC/XYZ classification, and campaign analysis largely automate system-based forecasts, giving you better projections of future product sales with less effort. Demand plans are created in an automated, exception-based planning process that takes all interactive and manual planning options into account.

      In addition to classic demand planning for medium- to long-term forecasts, SAP IBP for Demand features Demand Sensing, which optimizes an existing forecast down to a specific day based on current sales data and pattern recognition for the short-term horizon.

      Take advantage of…

      • Enhanced requirements determination  while refining your forecasts for optimized inventory management
      • Robust static models with sophisticated forecasting algorithms in combination with machine learning
      • Time series analyses that let you classify your products based on the patterns shown in your history
      • Targeted requirements planning in combination with multiple demand signals
    • SAP IBP for Response & Supply, which is based on both time series and orders, gives you the option of using heuristics or the configurable Optimizer to create finite or infinite plans for tactical procurement planning across all production stages based on the requirements at hand (forecast, orders, target inventories). Infinite plans help your planners identify capacity bottlenecks and replenishment problems, while finite plans help them create a feasible procurement plan (with the option to fine-tune costs with the Optimizer).

      In the short-term horizon, SAP IBP for Response & Supply plans based on orders, taking quota fixing and product shelf life into account, and generates confirmations for covered requirements.

      Simulations help your planners deal with critical bottlenecks by comparing different alternatives and identifying and displaying limiting factors (material availability, capacity, delivery time, and more).

      The user-friendly interface, together with the underlying SAP HANA architecture, speeds up the planning process noticeably, giving you more time time to make improvements in this area.

      The results are then incorporated into the overarching planning process with SAP IBP for Sales & Operations Planning and shared with the SAP S/4HANA system, where they are also directly available for advanced available-to-promise (aATP) and extended planning (formerly APO PP/DS).

      You benefit from:

      • Support for planning processes through high-performance cost- and rule-based methods
      • Creation of feasible production and distribution plans in medium- to long-term planning
      • The combination of availability checking (ATP) and supply chain planning
      • The ability to react quickly and flexibly to changes in requirements and in the supply chain
    • SAP IBP for S&OP lets you maximize your operating results through cooperative decisions along the supply chain. In this process, your sales and operations plans are synchronized, balanced, and optimized in accordance with your corporate strategy and targets such as sales growth, market share, and contribution margin.

      SAP IBP for S&OP delivers a feasible plan that covers all your company's departments and divisions. To assemble this S&OP plan, the module consolidates and harmonizes your demand plan, stocks, shelf life, procurement plan, and production capacities. The results it provides illustrate the effects on product mix, inventory, service level, and profitability.

      Thanks to user-friendly access through the MS Excel front-end and graphically prepared Fiori analyses and dashboards, both planners and managers can review the S&OP plan in detail.

      The process management integrated into SAP IBP for S&OP gives you a powerful tool for monitoring and controlling planning processes. The automated workflow makes it possible to automatically change authorizations in the planning process, execute planning steps, or notify groups or individuals. Process analyses enable you to quickly identify process changes (such as longer terms in a demand forecast) and assess the impact on downstream processes.

      What-if simulations also let you analyze, assess, and compare different planning approaches, scenarios, and results interactively in nearly no time at all. A high-performance SAP HANA database guarantees fast calculation of the effects, even for complex planning changes. This makes it possible to update capacity utilization immediately after making changes to requirements planning, for instance.

      How you’ll benefit at a glance:

      • Match supply and demand with real-time planning
      • Run what-if analyses with the support of simulationsand scenario comparisons
      • Improve teamwork and increase efficiency in the planning process
      • Measure and monitor actual performance in relation plans
    • In particular, SAP IBP for Inventory Planning & Optimization supports inventory optimization under consideration of the required service level. In this process, all nodes in the supply chain are fully analyzed with regard to supply and demand aspects and the result for each node is calculated in relation to the performance of the entire network (multi-echelon). As a result, you can increase inventory for strategically relevant nodes while reducing it for less important nodes.

      On the supply side, things like supplier reliability, delivery times, batch sizes, and other procurement details are considered, while the demand side includes elements like planned service levels, structural forecast deviations, and seasonal factors.

      The calculations are made simultaneously for the entire chain and provide particular support for inventory optimization in complex networks.

      The resulting inventory requirements optimize warehousing and production costs in downstream planning steps – for example, in SAP IBP for Response & Supply.


      How you’ll benefit at a glance:

      • Analysis and automated optimization of inventories in complex networks along your supply chain – to customers (horizontal) or within production (vertical) – while taking the required service level into account
      • Visualization and simulation of future stock development (quantities and values)
      • Automated seasonal inventory adjustments
      • Optimization of warehouse and production costs
    • Minor fluctuations in sales and uncertainties in requirements planning often result in major variations in requirements in production or procurement along the supply chain. Depending on how quickly production or purchasing react and change their plans, this can lead to major (excess) inventory on one side and missing parts on the other.

      If the complete supply chain is so difficult to plan for, why not divide it up into smaller, more manageable sections? Appropriate inventory buffers at decoupling points ensure a continuous flow of materials and material availability without building up oversized inventories.

      With IBP for Demand-Driven Replenishment, the necessary buffer sizes are calculated by the system and adjusted cyclically.

      A simple color scheme (green/yellow/red) lets planners identify the current and future requirements situation at a glance and make targeted changes as needed.

      Advantages of this planning concept:

      • Less dependence on the quality of demand planning
      • High material availability for customers (service level), as well as for components in production (more stable production planning)
      • Simple, comprehensible rule set
      • High customer satisfaction with generally low inventories
    • Supply Chain Control Tower lets you analyze your end-to-end process and monitor the performance and profitability of your supply chain in real time. Thanks to global transparency based on data from any number of systems, the flexible alert management feature will enable you to identify potential problems early on.

      Modern machine-learning algorithms can detect unusual situations without having to define a complex set of rules beforehand. Use the case management component to track the development of a situation or analyze and document the effectiveness of adopted measures. The SAP JAM collaboration platform enables shared processing of planning situations, even across departments and companies when needed.

      Supply Chain Control Tower enables you to take quick, timely action instead of just reacting to events. Through integration with other systems such as the ARIBA Supplier Network, this module also facilitates agile collaboration between companies.

      The integrated KPIs from the SCOR model help you keep an eye on trends in every aspect of your supply chain. If necessary, you can define additional KPIs to improve your individual supply chain.

      How you’ll benefit at a glance:

      • End-to-end monitoring of the supply chain, from supplier to end customer
      • Early detection of disturbances and special cases, along with effective tracking in the supply chain, using the integrated case management tool
      • Experts can collaborate across different departments
      • Overview of your supply chain based on individual dashboards (Planner Workspace)

    Overview of benefits

    SAP IBP helps you…

    • Automatically consolidate information from a variety of sources in one place
    • Configure custom online dashboards – consisting of meaningful KPIs tailored to each planner’s individual needs – to keep track of the big picture at all times and effectively coordinate planning
    • Consolidate your requirements, plan them according to different procedures, and optimize procurement plans – and achieve better planning quality in shorter planning cycles
    • Identify and plan demand trends through predictive analysis and artificial intelligence
    • Evaluate different scenarios by running simulations with different criteria
    • Set configurable alerts to identify, analyze, and resolve impending bottlenecks
    • Optimize your inventories, along with stockkeeping and production costs, while maintaining your service level

    Is IBP a good fit for your company? How can you use it?

    Demand planning and production planning depend on many different factors. The amount of data that has to be analyzed and assessed is growing constantly, making it even more difficult and complex to consolidate. You have to be able to coordinate and integrate your business processes. To do so, you need an overview of the required resources in order to synchronize all these processes.

    Supply chain managers often spend a lot of time creating Excel spreadsheets. Aside from transfer errors during updates, this method also struggles to maintain current data. Consolidating and coordinating data among many different planners takes time and is also prone to errors. In many cases, the data is obsolete before it can even be fully consolidated and processed.

    Today’s supply chain managers not only need up-to-the-minute data; they also have to be able to track and rectify the causes of delays in planning. This is where SAP Supply Chain Control Tower comes into play. The integrated case management tool gives supply chain managers the possibility to track cause and effect, collaboration and task delegation, and responsibilities involved in complex challenges along the supply chain. This helps improve future planning and proactively avert critical situations.

    SAP IBP also solves the “data silo” problem, in which different, incomplete perspectives prevent the best decisions from being made. SAP IBP gives you a centralized, consolidated data pool that supports you in evaluating and implementing your planning effectively and efficiently.

    SAP IBP and sustainability

    SAP IBP supports you through efficient planning – not only in optimizing your costs and planning quality, but also in improving the sustainability of your production and procurement processes. Improved planning helps you avoid surplus stock (which might eventually require disposal), along with unnecessary shipments.

    Imagine, for example, that you produce and store components and materials for a product for which there is no longer a corresponding level of demand. This could have been avoided with predictive planning. Improved planning helps you optimize your scrapping rate, paper and packaging waste, greenhouse gas emissions, returns rate, and many other sustainability-related KPIs.

    In addition, SAP IBP supports integration with SAP Product Footprint Management (PFM). SAP PFM lets you compare the environmental impacts of different planning alternatives, calculate the carbon footprints of your products over their entire life cycles, and give your customers and business partners insights into the environmental effects of your products. This data-driven approach is ideal for successfully establishing sustainability aspects at your company.

    The simulation function in SAP IBP lets you perform comparisons with a focus on emissions, enabling planners to assess scenarios according to sustainability aspects in addition to (or together with) other aspects – on the basis of costs, for instance.

    Find out more about how we can support your planning efforts!

    Further information about SCM

    Your expert

    A profile of Scheer CTO Dr. Wolfram Jost

    Wolfram Busch

    Expert Supply Chain Management