The standard delivered planing areas of SAP Integrated Business Planning (IBP) for Supply Chain and other elements of the Rapid Deployment (templates, sample analytics, sample datasets, and so on) are configured to support the design and implementation process as follows:
- Current process and tools are embedded
- Ease of setting up a proof of concept model and conducting mockups with business users
- Flexible configuration capabilities for demos in 3 to 5 sprints before go-live
A planning model is a master plan that defines how information is stored and aggregated in a system. The SAP IBP solution includes the following sample planning models:
SAP3 - Inventory
SAP4 - Supply (and some S&OP)
SAP 4C – Business Network Collaboration
SAP 4S – Time Series Shelf Life Planning Heuristics
SAP6 - Demand
SAP9 - MRO
SAP7F – Response
SAP8 – DDMRP Buffer Planning
SAPIBP1 – Unified Planning Area
You can start creating your own model by copying one of the sample models and then extending it as necessary to meet your particular business needs. You can add your own master data types, key figures, calculations, and attributes or adapt existing ones as required. With release 2305 the sample planning area SAP7 has been removed and only planning area SAP7F will be available for order-based planning.
A company's ability to swiftly and effectively adapt to changing market conditions often defines its competitive advantage. In this context, it is essential to explore Integrated Business Planning (IBP), specifically focusing on how SAP facilitates this process.
Integrated Business Planning is a critical mechanism for addressing challenges, risks, and opportunities within the supply chain. While SAP Sales and Operations Planning (S&OP) traditionally focuses on balancing supply and demand, IBP extends S&OP principles across the entire supply chain. This is achieved through advanced demand and supply planning integrated with financial plans, linking strategic planning to operational execution.
Balancing demand with supply is an essential process for effective supply chain management. This process involves integrating demand, supply, and financial models at both aggregate and detailed levels to create a comprehensive and scalable model. This model serves as the foundation for efficient demand and supply management, ensuring that businesses can adapt to varying needs and conditions.
One of the critical components of this approach is real-time "What If" scenario planning. This capability allows businesses to simulate different scenarios and analyze their potential impacts on the entire model, enabling quick and informed decision-making.
Collaboration plays a vital role in this process, promoting transparent communication and ensuring that all decisions are recorded and accessible to all stakeholders. This collaborative environment helps teams to align their efforts and work together seamlessly.
Additionally, having an intuitive user interface (UI) that is accessible anytime via web, Excel, and mobile devices is crucial. This accessibility ensures that users can interact with the model and make necessary adjustments regardless of their location or device.
The process of balancing demand with supply involves several stages: sales and marketing forecasting, consensus demand planning, inventory target setting and projections, material and capacity-constrained planning, planning and profit impact, executive review and real-time analytics, and adjusting and responding to supply and demand changes. Each stage represents a critical step in the overall process, contributing to a comprehensive and dynamic approach to managing demand and supply effectively.
Key Topics
As you progress through this lesson it's important to concentrate on several key topics that are crucial for mastering the content. These areas of focus are not just topics to be learned—they are your stepping stones to a deeper understanding and successful achievement of the course's learning objectives. By emphasizing these crucial areas, you will develop a robust knowledge base that will enhance your proficiency and effectiveness in supply chain management.
Forecast Error:
The difference between the forecasted demand and the actual demand, used to assess the accuracy of demand planning.
Heuristic Supply Review:
A method of supply planning that uses rules and guidelines to find a satisfactory solution that is not guaranteed to be optimal but is sufficient for decision-making
Reconciliation Review:
A process that ensures consistency and alignment between different plans, such as demand, supply, and financial plans.
Footprint Analysis:
An assessment of the distribution and impact of supply chain activities across different geographic regions and markets.
Inventory Planning:
The process of determining the optimal quantity and timing of inventory to meet demand while minimizing costs.
Response Management::
The capability to react quickly and effectively to changes in supply and demand conditions, ensuring that customer needs are met.
Supply Chain Monitoring and Integrated Business Planning
SAP offers a comprehensive Integrated Business Planning solution, some of its features include:
Holistic Model:
This model encompasses demand, finance, and supply chain planning. It is flexible and accessible via Microsoft Excel and can be easily reconfigured as needed. Built on SAP HANA, this "in-memory" data and analytical solution supports scalability and handles large volumes of data and calculations.
Real-Time Scenario Planning:
The platform enables real-time scenario planning and comparison of various plans at both granular and aggregated levels. Powered by SAP HANA, it offers highly flexible and efficient analytic capabilities. The "what-if" simulation feature allows planners to explore strategic decisions. SAP HANA's high-speed, in-memory computing sets it apart in the market.
User-Friendly Interfaces:
Available across multiple platforms—web-based desktop browsers, Microsoft Excel, and mobile applications—these interfaces provide quick access and immediate visualization of planning data, enhancing user experience.
Introduction to SAP-Integrated Business Planning for Sales & Operations Planning
SAP Integrated Business Planning (IBP) for Supply Chain is a world-class solution for:
- Sales and operations planning (S&OP)
- Supply chain monitoring
- Demand management
- Inventory planning
- Supply planning
- Response management
It is important to note that S&OP is the core of Integrated Business Planning. This process aligns demand and supply to drive a business outcome.
It has become increasingly important for businesses to power growth, resiliency, and efficiency. Several maturity models have been developed by analytical consultancy/corporate entities. These models facilitate the determination of the different stages of S&OP, which include the following:
Creating a feasible plan
Matching demand with supply
Driving the most profitable response
Building demand-driven supply chain capabilities
Orchestrating through market driven value networks
Optimizing inventory
Key Capabilities.
SAP provides a solution to cover all six stages of the above planning process. This approach includes the following key capabilities:
Analytical Capabilities:
Embedded analytical and integration tools in the planning process allow users to quickly assess and study the effects of various supply and demand scenarios without switching between systems.
User-Friendly Interface:
The interface combines the familiarity of Microsoft Excel with the power of the SAP IBP solution, eliminating the need for separate spreadsheet-like programs and enhancing user experience.
Real-time scenario planning
Built on the SAP HANA platform, it streamlines access to planning data with in-memory database structures, allowing efficient real-time adjustments.
End-to-End Integration:
SAP IBP allows seamless integration with various systems, enabling the exchange of diverse data types (e.g., master data, order data, POS data) and ensuring cohesive synchronization between SAP Business Suite and external third-party tools.
Functional Areas.
The following lists the planning provided by the out-of-the-box SAP Integrated Business Planning for Sales and Operations model provided by SAP:
- Demand review
- Supply review – heuristic
- Reconciliation review
- Management business review
- Forecast error calculation and analysis
- Time-series-based forecast consumption
- Footprint analysis
Personal Reflection
Reflect on a time when you were involved in a project or task that required coordination between different departments or teams. How did you manage the communication and alignment between these groups to achieve your goals? What challenges did you face, and how did you overcome them? Relate your experience to the principles of Integrated Business Planning (IBP) as discussed in the lesson.
Out-of-the-Box Configuration SAP Integrated Business Planning For Sales and Operations
Expert Response
In my role as a supply chain manager, I was tasked with launching a new product line, which required close coordination between the marketing, production, and finance departments.
To manage communication and alignment, I implemented regular cross-functional meetings where each department provided updates and discussed potential issues. We used collaborative tools to ensure everyone had access to the latest data and could provide real-time input.
One significant challenge was aligning the production schedule with marketing's promotional activities while staying within budget constraints set by finance. To address this, we utilized scenario planning to evaluate different production timelines and marketing strategies, ensuring we could meet demand without overextending our resources.
By applying principles of IBP, such as real-time scenario planning and end-to-end integration, we achieved a successful product launch that met our sales targets and stayed within budget. This experience highlighted the importance of cohesive planning and communication across all departments to achieve strategic business goals.
Lesson Wrap-Up
In this lesson, we explored the importance of Integrated Business Planning (IBP) and how SAP's IBP solution facilitates effective supply chain management.
Key points covered include:
Integrated Business Planning (IBP):
A strategic process that aligns demand, supply, and financial planning across the supply chain to enhance decision-making and performance.
SAP HANA Platform:
The backbone of SAP IBP, offering high-speed, in-memory computing for real-time data processing and analytics.
Key Features of SAP IBP:
Holistic model integrating demand, finance, and supply chain planning, accessible through familiar tools like Microsoft Excel. Real-time scenario planning and "what-if" simulations to support strategic decision-making. User-friendly interfaces available across web-based browsers, Microsoft Excel, and mobile applications for quick data visualization. End-to-end integration with various systems, enabling seamless data exchange and synchronization.
Core Functional Areas:
Sales and operations planning (S&OP), supply chain monitoring, demand management, inventory planning, supply planning, and response management.
Stages of S&OP:
Creating feasible plans, matching demand with supply, driving profitable responses, building demand-driven capabilities, orchestrating value networks, and optimizing inventory.
Analytical Capabilities:
Embedded tools for swift analysis of supply and demand scenarios without switching between systems.
Challenges and Solutions:
Real-life applications of IBP principles to manage communication, alignment, and resource constraints effectively.
By understanding these concepts, you can better appreciate how SAP IBP supports strategic and operational decision-making, ensuring a more resilient and efficient supply chain.