Describing the Planning and Forecasting Collaboration Process

Companies today face many challenges in the planning and forecasting phase of the source to pay process. With no collaboration between buyers and suppliers, your organization may face many issues.

Those issues include:

• Missed or delayed shipments
• Inefficient integrations with individual trading partners
• Lack of analytics capabilities
• Poor visibility into the source of supply
• Inefficient and outdated collaboration platforms
• High safety stock levels
• Stock outs

To keep up with demand, an organization must maintain strong communication and collaboration between the process owners of the supply chain planning process at the customer end and at the supplier end.

In order to control uncertainty, a company must increase their agility and flexibility.

A reduction in inventory and significant working capital improvement can help the company improve their business combined with secure goods tracking.

Economically, to strive for a greener business model, an organization must reduce supply chain cost, risk, and carbon impact. Additionally, they should consider greater visibility to drive ethical behavior throughout the supply chain.

1. Generate cash flow and improve working capital

   Companies can gain:

   • Lower inventory
   • Increased transparency of forecasts, orders, shipments, quality, and goods receipt
   • Higher on-time delivery in full
   • Lower safety stock buffers when reducing absolute and/or variable lead times
2. Reduce Cost

   Companies can gain:

   • Lower inbound expedited transportation spend
   • Higher overall equipment effectiveness
   • Lower supply and distribution planning cost
3. Mitigate Risk

   Companies can gain:

   • Lower revenue loss due to stock outs
   • Faster supply chain planning cycle times
   • Lower supplier defect rate
   • Minimization of supply chain disruptions from large one-time events

This diagram illustrates the major process steps of an collaborative planning and execution process flow.

Enterprise level planning should digitally collaborate with suppliers to gain:

• Single, global solution for efficient collaboration
• Improved supply visibility with continuous monitoring and benchmarking
• Easy management of all collaborative direct order processes
• Built-in corporate policies
• Real-time visibility into supply chain metrics
• Low IT costs, even with thousands of suppliers
• Configurable business rules with automated validation and reconciliation

Planning and Forecasting collaboration allows an organization to improve planning accuracy by using actual forecast commitments provided by the supplier instead of assumptions. The buyer shares these forecasts created in the planning process/system. The supplier can then consume it and, after running its own planning run, share its commitment.

Any differences from the original will be made visible to the buyer. If the view of the forecast is different from the buyer’s view it can be discussed. Collaboration can help to zero in on the root cause of this confusion.

The buyer and supplier can then decide if anything additional can be delivered or potential upside capabilities. This can be leveraged by the planner when running "what if" scenarios.

The system has a flexible user interface with search filtering and configurable views, choice of time frame for in-process items, shows related firm orders and has csv download and upload.

SAP Ariba's planning and forecast collaboration tools provide a common buyer and supplier view and offer visibility into and improved management of forecast commitments.

Companies who use SAP Ariba planning and forecasting tools gain:

• Optimization of supply chain stock levels to avoid shortfalls/excess inventory
• Comparison between buyer firm or planned net demands and supplier firm or planned receipts
• Same view for buyer and supplier for a quick overview of critical situations
• Multilevel supply planning heuristic to generate supplier forecast (component demand sourced from suppliers using buyer’s unconstrained finished good forecast)
• Forecast tab in the planning section that allows suppliers to filter by material number, including ranges, buyer planner code, date range, and time bucket type; forecast demand quantities that can be grouped into daily, weekly, monthly, or yearly time buckets

Additionally, other product features include:

• Suppliers are able to commit the confirmed quantities and publish them in SAP Ariba
• Custom alerts that inform users about over- and under-committed components
• Predefined charts to drive decision making on actions resulting from deviations versus the original supplier forecast
• Forecast commit quantities taken as "supplier capacity" input for the buyer’s constraint-based supply planning in SAP Integrated Business Planning