Introducing SAP IBP for Demand

Objective

After completing this lesson, you will be able to apply SAP IBP to optimize their supply chain functions and improve demand management processes.

Introduction to SAP IBP for Demand

Overview of SAP Integrated Business Planning modules. SAP Supply Chain Control Tower, SAP IBP for sales and operations, SAP IBP for demand, SAP IBP for inventory, SAP IBP for demand-driven replenishment, SAP IBP for response and supply. Basis is the SAP IBP Platform on SAP HANA.

SAP Integrated Business Planning for Supply Chain solution (SAP IBP) is a complete system that can be leveraged to manage a corporation’s supply chain functions. It is a SAP HANA based cloud offering with several individual modules that manage a specific process. All of the modules can be used together for a robust supply chain, which gives individuals from various departments, end-to-end visibility into the health of the supply chain.

Many corporations today operate at a global level. Volatility and competition are high, and meeting customer service levels is critical.

Supply Chain volatility on the rise with changing customer expectations. Market growth depends increasingly on serving a global customer base. Globalization significantly increased the supply chain complexity. Big Data and new, innovative technologies provide new opportunities.

In such a competitive, changing global market, agility, visibility, and accuracy are critical for a corporation's survival. SAP Integrated Business Planning brings data, people, and scenarios together in one place for greater business advantage.

Differentiate in a competitive environment by being agile and responsive to changing customer expectations, by quickly capitalize on trends with new products, by entering new markets rapidly, by capturing new customers before competition, by maintaining high customer loyalty. To do this Supply Chains have to be fundamentally faster to accommodate the need for speed-

SAP solutions help you to reach your goal using state-of-the-art business processes, connected planning processes, leveraging end-to-end visibility, and faster planning cycles.

Using SAP Integrated Business Planning for Supply Chain to leverage an end to end planning process, from Demand, Inventory, Sales & Operations Planning, Demand Driven Replenishment, Response & Supply to the operative planning in SAP S/4HANAwith Production Planning, Available to Promise and MRP. Surrounded by SAP Supply Chain Collaboration (SAP Ariba). The solution allows for state-of the art business processes, synchronized planning processes, leverage end-to-end visibility and faster planning cycles.

SAP IBP is a world class integrated business planning solution that enables supply chain leaders to balance demand plans with network constraints and attain profitability goals.

Mission of SAP Integrated Business Planning for Supply Chain: A world class integrated business planning solution, that enables supply chain leaders to balance demand plans with network constraints and attain profitability goals.

One integrated model, based on a SAP HANA state-of-the-art architecture, ensures the ability of real-time planning and monitoring, flexibility, and integrated business processes.

SAP Integrated Business Planning offers a unified user experience. Flexible and extensible data model and pre-built business model templates. Real-time planning and simulation capabilities. Role-based user experience with consumer grade interface. Interoperability with Business Network in SAP Ariba. Interoperability with Financial Planning in SAP Analytics Cloud. Embedded social collaboration for transparent communication. Integrated business alignment for entire value chain. Real-time insight and monitoring on aggregated and detailed level.

This course focuses on demand management processes as covered by the SAP IBP for demand solution.

Overview of all SAP Integrated Business Planning modules. SAP IBP for demand is highlighted.

SAP IBP helps tackling today’s challenges in business and in daily work. On the one hand, a high market volatility increases variation in demand, and increases customer demand. On the other hand, poor forecast accuracy, inefficient operations, low service level, and excess inventory are the challenges.

How SAP Integrated Business Planning can solve different types of problems. Top Business Challenges are high market volatility, variation in demand is increasing and increasing customer demand. Challenges in daily work are poor forecast accuracy, inefficient operations, low service level and excess inventory. For these reasons the supply chain needs to adapt to new business realities. Supply chain volatility is on the rise with changing customer expectations. Making growth depends increasingly on serving a global customer base. Globalization significantly increases the supply chain complexity. Big Data and new, innovative technologies provide new opportunities.

Unfortunately, things rarely go exactly as expected on the demand side — and they multiply over the entire supply chain. Examples for demand factors are promotions or simply time-varying demand.

Different Demand Factors influence the supply chain, e.g. simultaneous external demand from multiple customers, seasonal, time-varying demand, intermittent demand, promotions, outliers, over- and under-forecasting, consideration of recent process changes. Those factors multiply as forecast decisions are needed at every point in the enterprise-wide supply chain for each product for supply planning.

Compare the forecasting and planning activities to maps and GPS you use for navigation. Then, demand sensing would be a function that concretely provides interactive response from the current driving situation — like the opportunity for blind spot monitoring, lane sensing, or traction control.

Forecasting and Planning are like Maps and GPS: High level plan, Where are we, where are we going? Various degrees of sophistication, which can be summarized as planning and preparation. Demand Sensing is like additional driver's aids: Windshield display, blind spot monitoring, lane sensing, traction control. Which can be summarized as driving value.
SAP Integrated Business Planning for demand equals traditional demand planning (mid- or long-term forecasting) plus demand sensing (short-term forecasting).

Two major components feed the forecasting engine of SAP IBP for demand: the PAL (predictive analysis library, which is part of SAP HANA), and the SCAL (supply chain algorithm library). Based on these libraries, optimization is possible.

Here we show the major key capabilities and business values of SAP IBP for demand summarized on a single page.

Key Capabilities: Demand Sensing and mid/long-term forecasting in one comprehensive demand management solution. Detailed statistical analysis of demand data via predictive analytics tools, automated, exception-based planning processes as well as manual planning capabilities, embedded, on-the-fly demand analytics. Business Value: Build a single, comprehensive demand plan, integrated with the consensus forecasting process, improve service levels, reduce stock-outs and lower expediting costs through more accurate daily forecasts, reduce inventory targets by lowering forecast error, anticipate plan deviations via embedded analytics.

With the two components mid-term or long-term forecasting and demand sensing, SAP IBP for demand has two integrated forecasting techniques on board. Demand sensing further specifies the short-term forecast taking into account short-term boundary conditions.

Mid- or long-term forecasting is a demand planning process that helps to cope with the uncertainty of the future, relying mainly on data from the past and on the analysis of trends. Demand Sensing is the science of making these mid- or long-term forecasts more accurate, more profitable in the short-term horizon, relying mainly on data from the present and recent past and on the analysis of patterns.

Due to the more granular time and data and the specific nature of demand sensing, the plan becomes closer to the execution requirements.

Rising the data granularity form long-term planning used for annual budgeting, strategic planning or network design, to medium-term planning used for Sales and Operations Planning, Demand planning, Inventory planning or production planning, to short-term planning for demand sensing, to Execution for deployment, kitting/ packaging, order fulfillment and logistics execution.

Demand sensing affects the 'execution' type of activities more as it is within a much shorter horizon than demand planning.

Demand Sensing influences different execution processes like deployment and transportation decisions, production and packaging sequences or material purchasing.

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