SAP Best Practices for SAP IBP

Objectives

After completing this lesson, you will be able to:

  • Leverage SAP Best Practices for SAP IBP

SAP Best Practices for SAP IBP

The tool to access the SAP Best Practices content starting with SAP IBP 2305 is SAP Signavio Process Navigator. SAP Best Practices for SAP IBP will be updated and enhanced every quarter and gives you everything you need to run Planning processes in the following applications:

  • SAP IBP for sales and operations
  • SAP IBP for response and supply
  • SAP IBP for demand
  • SAP IBP for inventory
  • SAP IBP for demand-driven replenishment
  • SAP Supply Chain Control Tower
Note
For more information, please consult: https://me.sap.com/processnavigator/SolS/EARL_SolS-034 (direct link to SAP Best Practices for SAP Integrated Business Planning) or https://me.sap.com/processnavigator (general link).

All scope items are based on a comprehensive data model, which enables you to execute an integrated, end-to-end business process. SAP Best Practices comprises Planning View templates for interactive simulations and what-if analyses, predefined dashboards for embedded analytics, alert definitions for exception-based Planning, integration for context-aware social collaboration, and sample data to showcase the end-to-end process.

Business Benefits

  • Reduce Sales and Operations Planning costs
  • Improve demand forecast accuracy and react more quickly to changes in demand
  • Increase sales forecast accuracy
  • Reduce inventory carrying costs and increase inventory turnover/reduce days in inventory
  • Improve on-time delivery performance
  • Increase revenue and reduce revenue loss due to stock-outs
  • Increase user productivity by using Microsoft Excel for interactive Planning and by integrating social collaboration

Important covered Process Steps

  • Detailed configuration documentation for setting up predefined SAP Best Practices processes
  • Predefined Planning Views in Microsoft Excel
  • Predefined charts and dashboards to analyze trends and exceptions
  • Predefined process management to track progress and integration into social collaboration
  • Based on integrated Planning areas, allowing you to operate and end-to-end process across all SAP IBP applications
Note

You can use the unified Planning area (SAPIBP1) to jump-start the implementation in case your business process requires integration across different SAP IBP applications. The unified Planning area is a comprehensive sample Planning area that supports an integrated Planning process covering all of the applications listed above. Just like any other sample Planning area, this Planning area delivers an out-of-the-box integration scenario, which you can customize to fit your unique requirements.

For the integrated Planning process based on the unified Planning area, the SAP Best Practices for SAP IBP provides sample data, Planning View templates, predefined dashboards, configuration guides, test scripts and more. Customer test tenants and SAP Integrated Business Planning for Supply Chain, starter edition instances include an activated copy of the unified Planning area with sample content.

Demand Planning

In the Demand Planning phase, the Demand Planner plans the upcoming demands. This is done in weekly cycles and involves the following tasks:

  1. Create statistical forecast:

    The Demand Planning process expert creates the statistical forecast based on the historical sales data.

  2. Create local demand plan:

    Based on the statistical forecast, the local Demand Planner creates the local demand plan, typically for a specific location product or product group.

  3. Create global demand plan:

    Based on the local demand plan and the final consensus demand defined in the previous Sales and Operations Planning cycle, the global Demand Planner creates the global demand plan.

Demand Sensing

In the Demand Sensing phase, the system creates the sensed demand as follows: Based on the future ordered quantity, confirmed quantity, the delivered quantity data from SAP ERP, and the global demand plan defined in Demand Planning, the sensed demand is calculated on a daily basis. The sensed demand is an input for creating the combined demand plan in Demand Planning.

Demand Review

In the demand review phase, the Demand Planner creates a complete consensus demand plan in the medium to long term Planning horizon based on the global demand plan on a monthly basis. The plan also takes into account sales and marketing inputs and ensures that financial targets are met.

  1. Integrate input data from external sources (such as SAP ERP):

    Some of the data used in the Sales and Operations Planning process needs to be retrieved from external sources. Examples of such data are the marketing plan, the financial plan, and the sales plan.

  2. Create consensus demand plan:

    During the demand review, representatives from sales, finance, marketing, and Demand Planning define a consensus demand plan, using the input key figures derived from Demand Planning, Inventory Optimization, and external sources.

SAP Integrated Business Planning for Inventory

SAP IBP for inventory runs weekly and uses the combined output of the Demand Planning and Demand Sensing processes to create an inventory plan. Inventory Optimization calculates inventory targets for each material at each location in a Supply Chain, considers and compensates for uncertainties in demand forecasts, supply timing, and supply quantity. The inventory plan serves as an input to the Sales and Operations Planning process.

Supply Review

Supply review is performed in monthly cycles and includes the following tasks:

  1. Copy input data:

    As a preliminary step in the Sales and Operations Planning process, a copy of the Combined Final Demand to the Consensus Demand and the Recommended Safety Stock key figures are created. This copy is used in the Sales and Operations Planning process, while the original key figure values are kept stable.

  2. Create constrained demand plan:

    During the supply review, the Supply Planner creates a constrained demand plan. To calculate the constrained demand plan, the Planning algorithm uses Master Data such as sourcing rules or quotas, resources, production sources (bills of material), lead times, lot sizes, and co-products, and input Planning data such as consensus demand, inventory target, and available capacity.

Supply and Allocations Planning

You can use Supply and Allocations Planning to create product allocations and a supply plan based on prioritized forecast demands and on Supply Chain constraints. For this process, the combined final demand is copied from SAPIBP1 to sample Planning area SAP7. Later on, the constrained forecast established in SAP7 is copied back to SAPIBP1. The Disaggregation Operator is used for copying between Planning areas.

You can take care of the process making use of the following key capabilities:

  1. Create a supply and allocations plan:

    The plan is the result of a Planning run considering rules and constraints.

  2. Analyze results and check alerts:

    The Planner analyzes the projected stock, the constrained forecast, and the product allocations and checks potential alerts for the constrained forecast.

  3. Analyze gating factors to better overcome them in the future:

    Regular gating factor analysis can help the Planner build up an even more comprehensive overview of the Supply Chain and make any necessary changes so the gating factors don't occur again in the future.

  4. Perform simulations based on changed supply or demand situations:

    The Planner can use simulations to try out potential solutions, and then update the plan accordingly.

Response Planning

You can use Response Planning to react quickly to incoming customer orders by creating order confirmations and an adopted supply plan based on prioritized demands, allocations, and Supply Chain constraints.

You can take care of the process making use of the following key capabilities:

  1. Run order confirmation:

    The orders are confirmed based on priority rules and supply constraints.

  2. Review confirmation results and analyze gating factors:

    The Planner can review the outcome of the order confirmation run to identify any potential problems, such as stock shortages.

  3. Perform simulations based on changed supply or demand situations, for example, adjusted allocations:

    The Planner can use simulations to try out potential solutions, update the plan accordingly, and then perform order confirmation run.

Deployment Planning

You can use Deployment Planning to create a reliable short-term distribution plan that will consider unforeseeable events in the Supply Chain.

You can take care of the process making use of the following key capabilities:

  1. Check alerts for projected stock:

    A Planner can check alerts to identify a potential issue. For example, an alert is created for each location product when the value of the projected stock is negative.

    The Planner can then consider these issues when distributing available supply across the network.

  2. Perform a deployment run:

    The Distribution Planner plans the distribution of available supply to demand.

    The run takes all customer demand (sales orders), all confirmed component demands (for example, from production orders or stock transfer orders), all forecasted customer demands, and safety stock into account. It then tries to satisfy the demands with the existing supply elements. It does not look at the possibility of creating planned orders or purchase requisitions.

    During the deployment run, stock transfer requisitions are created. Those stock transfer requisitions that are pegged only to supply elements that are considered available to deploy become deployment stock transfer requisitions. This is your short-term deployment plan.

  3. Review Deployment Planning results and adjust a plan accordingly:

    The Planner can review the outcome of the deployment run in the SAP IBP, add-in for Microsoft Excel and the Projected Stock app to identify any potential problems, such as supply shortages and adjust a plan accordingly.

  4. Transfer the results to an external system:

    The Planning results can also be transferred to an external system and use them in execution processes to prepare the physical transport of goods.

Reconciliation Review

During the presales and operations meeting, representatives from sales, finance, marketing, production, and Demand Planning try to resolve deviations between the constrained demand plan and the consensus demand plan, and agree on solution proposals to be decided in the sales and operations executive meeting.

Management Business Review

During the executive sales and operations meeting, senior management assesses the solution proposals from the previous step. A decision on the final consensus demand is reached, based on the final constrained demand plan. This approved value is used as an input for the Demand Planning process, for creating the global demand plan for the following week.

Visibility, Alerts, and Case Management

The SAP Supply Chain Control Tower provides visibility over the end-to-end Planning process, offers alerting capability for exception-based Planning and enables effective issue resolution with the collaborative case management functionality.

Overview of Data Flow and Granularity

The following table shows the data flow between the SAP IBP applications and between SAP IBP applications and external systems:

From/ToSales and OperationsSupply (time-series-based)DemandInventoryResponse and Supply (order-based)External System(s)
Sales and Operations Monthly: consensus demand planMonthly: final consensus demand   
Supply (time-series-based)Monthly: constrained demand plan    Weekly: unconstrained forecast (if Response and Supply is not implemented
DemandMonthly: global demand plan  Weekly: demand forecast (global demand plan and final sensed demand)Weekly: demand forecast (global demand plan and final sensed demand)

Daily: Final sensed demand

Weekly: global demand plan

Inventory Monthly: safety stock   Weekly: safety stock
Response and Supply (order-based)

Weekly: constrained forecast

    

Weekly: unconstrained forecast

Daily: order confirmation run and deployment run

External System (s)

Monthly: financial plan, marketing plan

Weekly: committed forecast (if Response and Supply is not implemented)

 

Weekly: target service levels, forecast error

Weekly: committed forecast

 
 Master Data (when required), sales plan (monthly), historical sales (weekly), sales order data (daily)     

Periodicities and Aggregation levels

The following table lists the periodicities and the aggregation levels per Process:

ProcessPeriodicityAggregation Level
Sales and Operations Planning and Supply PlanningMonthly

From Product Family / Customer Region to Product / Location

Resource / Location

Demand PlanningWeeklyProduct / Customer / Location
Inventory OptimizationWeekly

Product / Location

Resource / Location

Demand SensingDailyProduct / Customer / Location
Supply and Allocations PlanningWeeklyDays / Product / Location / Customer
Response PlanningDailyDays / Product / Location / Customer
Deployment PlanningDailyDays / Product / Location / Customer
Analyzing visibility, alerts, and case managementOn demandAll Levels
Note

These periodic and aggregation levels represent general guidelines and they can be adjusted for specific requirements as needed.

For additional content related to the unified Planning area, see https://me.sap.com/processnavigator/SolS/EARL_SolS-034.

For general information about Planning areas, see the model configuration guide on SAP Help Portal at http://help.sap.com/ibp. Choose your release and then choose Model Configuration Guide.

The SAP IBP web client provides access to sample SAP Planning areas, which are shipped with SAP IBP. You can use sample Planning areas as a basis for creating your own Planning areas. You can copy one of the Planning areas and extend it as necessary to meet your particular business needs. You can add your own Master Data types, key figures, calculations, and attributes.

Planning Processes and Model Entities

Note
The following link provides an overview of SAP IBP features: SAP Help → SAP Integrated Business Planning for Supply Chain → Applications and Features of SAP Integrated Business Planning for Supply Chain. This site presents the available application licenses. Consider this note for system sizing SAP Note: 2423668

Time-series based Planning (TSP), using advanced algorithms, helps you to calculate the flow of products through your Supply Chain to satisfy demand. Using customer demand as the starting point and taking different constraints and Planning data into account, the algorithms calculate which locations in your Supply Chain can supply the product to the customer and how much each location can supply in each period of your Planning horizon.

Order-based Planning (OBP) helps you to create a supply plan using operational data and react to short-term changes. This approach enables Supply Planning from an operational perspective: It uses detailed data from external systems, and takes into account, for example, planned orders, production orders, sales orders, and purchase orders. Compared to the time-series-based Planning functions of SAP IBP, the order-based approach takes a shorter-term view.

The main objective with DDMRP implementations is to enable material and information flow through a Supply Chain. In DDMRP, flow is achieved in the following three ways:

  • By dampening the effect of variation across the Supply Chain by decoupling lead times and identifying where to buffer quantities of inventory, and how much to buffer to ensure the shortest possible lead time and the optimum amount of inventory.

  • By driving replenishment based on actual demand, rather than forecasts.

  • By exposing downstream inventory and demand status to upstream sources to facilitate demand-driven prioritization of supply.

SAP Integrated Business Planning for demand-driven replenishment supports Demand Driven Materials Requirement Planning (DDMRP) as defined by the Demand-Driven Institute.

The five components of DDMRP are as follows:

  1. Buffer positioning
  2. Buffer sizing
  3. Dynamic adjustments
  4. Demand-driven Planning
  5. Visible and collaborative execution.

As shown in the figure, these five steps are being supported by SAP IBP.

Note

As well as these Planning areas, small sample Planning areas with examples of advanced configuration to meet different business requirements are provided in SAP Notes, together with information on how to request L-code if configuration can't meet your requirements.

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