Business Pain Points of Acme Company
Collaboration is a tedious process between a company and its suppliers. Manual processes are error-prone, which results in oversights and mistakes.
Customer service levels are impacted by supply chain disruptions; opportunities to take corrective actions are missed.
When constraints are encountered and cannot be corrected, ACME struggles with how to allocate available quantities.
ACME has many locations in their supply chain, which necessitates a tool to determine when / how much of a product to deploy to each location.
ACME relies on a variety of systems to run the day-to-day business. This creates significant challenges for integration.
Using SAP IBP, ACME has better insight into supply chain disruptions before they happen. They can manage customer orders in a way that keeps the highest priority customers happy. This also helps ACME optimize inventory turns and maintain a high level of customer satisfaction.
Consensus Demand
Supply Planning and Collaboration
Supplier Planning in SAP Ariba
Supply Planner Reviews Supplier Commit
SAP IBP Constrained Forecast - Allocation Version
Review Supply Planning with Allocation Creation Results
The rule prioritizes sales orders by the customer or any other customer attribute. Forecast and any other demands not specified in the rule are picked up at the end of the prioritization rule.
Since we are running the Supply Planning with Allocation Creation run, only the forecast segment is relevant. A forecast is prioritized by the requested date.
Within a requested date, if the supply is not enough, the forecast is satisfied in order of sold-to party. For example, customer CU01, CU02, and CU03. The naming convention helps to define the sequence.
Due to a short commit from the supplier, every demand would be fulfilled with a delay which results in a penalty cost that affects all the demands post short commit. This results in a huge revenue risk.
Mitigate Revenue Risk
Review Supply Planning with Allocation Creation Run Results after Activating Emergency Supplier
The planner realizes that it is essential to escalate and see if there were options to mitigate the revenue risk arising out of short commits.
The planner shares gating factors information and its potential impact on revenue to the manager.
The manager gets back with a suggestion to simulate the situation with the emergency supplier, which is presently in a blocked status because of its long lead time and cost.
The planner welcomes the alternative option and prefers to give it a try and analyze the situation whether it will bring in improvement on planning results. The algorithm tries to use the main supplier for most of the cases, and in cases wherein there were constraints with the main supplier, it will shift orders to an emergency supplier. The emergency supplier is used for periods where there were short commits from the main supplier
All the demands are fulfilled without delay, values for Forecast Constrained (Late) vanish, and there were no periods wherein revenue is at risk
By introducing an emergency supplier, exceptions were mitigated, and the planner prefers to go with this approach and aligns with the purchase manager on the decision
As a next step, he copies the constrained forecast results into the allocation KF, which are further used in Supply Planning with Order Confirmation Run when sales orders are considered.
Supply Planning with Order Confirmation Run in Base Version
Sales Order Confirmation Review in SAP S/4 HANA
Production Planning in SAP S/4HANA ePP/DS
SAP IBP Deployment Run Based on SAP S/4 PPDS Production Orders
SAP IBP Fair Share Deployment
The planner then executes the deployment using the Fair Share method.
A comparison reveals that fulfillment across the customer base has improved with fair share logic and the planner decides to go with this approach to comply with minimum fulfillment % agreement with customers.
The summary of the entire process sequence is shown in the following figure.
