SAP IBP brings your Supply Chain functions together under one common roof, including sales and operations Planning processes coverage with Modules such as: SAP Supply Chain Control Tower, SAP IBP for supply and operations Planning, SAP IBP for demand, SAP IBP for inventory, SAP IBP for Demand-Driven Replenishment (SAP IBP for DDR), and SAP IBP for response and supply.
SAP Supply Chain Control Tower
Several components of SAP Supply Chain Control Tower cover the tasks for end-to-end visibility, exception handling, and performance management:
- Proactive issue resolution through increased visibility and orchestration
- Increased responsiveness through real-time decision making capabilities
- Better decision making across the supply chain
- Lower inventory costs due to multi-tier visibility into inventory, demand, and supply
- Improved customer service with effective alert and exception management
The key functionalities of SAP Supply Chain Control Tower is about end-to-end visibility of the Supply Chain, real-time monitoring, Supply Chain visualization, drill-down capabilities for detailed analyses, built-in case, and task management.
SAP Integrated Business Planning for Sales and Operations
SAP IBP for sales and operations provides the following basic functions:
- Effectively balance demand and supply, and attain financial targets
- Optimize product mix and customer/market allocations for maximum margin contribution
- Align strategic, long-term supply chain planning with operational, short-term planning
- Create the optimal business plan to drive revenue growth and increase market share
- Improve on-time delivery
- Improve capacity utilization
SAP IBP for sales and operations supports the fundamentals of the individual SAP IBP modules to leverage the end-to-end sales and operations process. The sales and operations process comprises of the following:
Demand Planning with statistical forecast and input consolidation
Supply Planning with capacity overview and Planning heuristics
Scenarios and simulations Planning can be done to simulate what-if analysis
Process management to follow the process step by step is a strong tool to enable a proper flow and understand its completion status
As per the figure above, we can see a strong integration between the processes.
Sales and Operations: Exercises within this course
During this course we will take you through the sales and operations exercises as part of the Demand and Supply Management, consisting of the following:
- Global demand review and consolidation
- Inventory Optimization
- Generation of an unconstrained plan with sales and operations heuristic
- Review of Capacity impact
- Simulation and Scenario management
- Generation of a constrained plan with the optimizer
- Usage of Analytics and Collaboration capabilities
SAP IBP for demand includes the following Planning process steps:
- Build a single, comprehensive demand plan, integrated with the consensus forecasting process
- Reduce safety stock levels by lowering forecast errors
- Improve service levels, reduce stock-outs and lower expediting costs through more accurate forecasts
- Anticipate plan deviations via embedded analytics
SAP IBP for demand includes a key functionality that does the following:
- Gathers historical data
- Provides Statistical Forecasting and Demand Sensing
- Combines and adjusts forecasts flexibly and easily
- Generates demand scenarios for further analysis
SAP Integrated Business Planning for Inventory
SAP IBP for inventory includes the following process steps:
- Improve customer service levels and minimize stock-outs
- Maximize the efficiency of inventory and working capital
- Standardize the inventory target-setting process at each tier within the supply chain to feed operational plans
- Improve planner productivity, standardize planning processes
SAP IBP for inventory provides the following basic key functionality: Input data review, Inventory Planning, what-if analysis, alerts, and manual overrides.
SAP Integrated Business Planning for Response and Supply
The SAP IBP for response and supply process includes the following steps:
- Generate feasible supply plans to meet demand with minimum inventory and efficient capacity utilization
- Gain upside revenue and competitive advantage by rapidly adjusting plans to seize demand opportunities and respond to supply disruptions
SAP IBP for response and supply includes several key functionalities to support tactical, time-bucketed and operational, order-based Supply Planning.
The SAP IBP for demand-driven replenishment application has the following capabilities:
Changing the game often means changing the way you think and behave, challenging historical and deeply ingrained business practices. In a linear Planning and execution world driven by traditional Material Requirements Planning (MRP), companies find themselves locked into certain outcomes like burgeoning inventory investment and service level challenges that are natural by-products of that methodology.
SAP IBP for demand-driven replenishment supports a methodology known as Demand-Driven MRP or simply DDMRP that re-defines the way we think and behave in Supply Chain Planning. Incorporating concepts like material flow, de-coupling points and inventory buffers. DDR supports a replenishment strategy based on actual demand instead of forecasts.
For companies interested in or already embracing DDMRP methodology, SAP provides a complete end-to-end solution. The demand-driven operating model, as promoted by the Demand Driven Institute, including DDMRP, is an important new methodology that has the potential to drive significant improvements globally in Supply Chain management.
DDMRP is more than a software solution – it is an end to end methodology for a new approach to Planning and execution that requires training (certification is offered), and significant business changes to processes and KPIs. Executive endorsement and support is essential, and change management is critical.
It is common for companies who fully embrace the methodology to see significant improvements in lead time to the customer and inventory reduction of 25-50%, with near perfect customer service.