SAP Integrated Business Planning for Supply Chain (IBP) is a cloud-based solution with assistance for demand planning, sales and operations planning, forecasting, supply, and inventory planning. Named a leader in Gartner’s Magic Quadrant for Sales and Operations Planning Systems of Differentiation, SAP IBP provides end-to-end visibility spanning across an organization’s data. Coordination through automated processes and machine learning algorithms makes SAP IBP particularly useful, with real-time data and analytics tools for optimization. Additionally, like other SAP solutions, IBP provides a great user experience through its user interface and flexible interface. Powered by SAP HANA in-memory technology and built on the HANA platform, SAP IBP can integrate with other ERP solutions to fit organizational needs to a global scale, increasing speed and accuracy at low cost. This is an especially helpful tool for pandemic times, and in early April 2020 SAP announced that they would offer planning as a service with the SAP IBP for Supply Chain solution at no cost.
SAP IBP provides multiple independent components that can be utilized based on organizational needs, with components not used at a given time still available for activation later if requested. Sales and Operations (S&OP) planning for Demand and Supply is the core of IBP, and other key components include Demand, Response and Supply, Inventory, and the Supply Chain Control Tower. These planning tools are also able to be paired with Microsoft Excel’s analysis tools, with templates provided for exports. This Excel integration is perhaps one of the biggest benefits coming from an SAP IBP implementation, enhancing the ability to easily communicate planning information across your organization.
Breaking Down the IBP Components
SAP IBP’s individual components have different functional capabilities for different elements of supply chain management. The Demand component forecasts across different timelines, Response & Supply creates forecasts for materials and constraints, and Inventory monitors supply chain targets. This is all managed with the Supply Chain Control Tower’s decision-making tools and end-to-end visibility.
- S&OP: The S&OP core takes inventory and product mix into consideration for supply and demand planning, maintaining target service levels and profitability. It also adjusts short- to long-term strategic plans to achieve financial goals and support business growth.
- Response & Supply: Response & Supply helps coordinate short- and long-term plans using customizable what-if-analysis templates to manage uncertainty. It also uses capacity and materials constraints in rapidly adapting models based on simulations for procurement, production and distribution. With the S&OP core, Response & Supply emphasizes time series planning and uses real-time data such as planned orders to integrate with the ERP system. Automated exception alerts based on organizational data also assist with effective planning.
- Inventory: The Inventory component manages targets using real-time data on inventory locations across the supply chain. It uses the HANA platform to share data across an organization, optimizing inventory levels with tools that explore demand, supply, and cost drivers. Considering customer preferences and expectations as well as economic changes affecting demand, complex multi-echelon networks can be simulated. Additionally, this component can reduce costs as planning keeps inventory management on track and reduces the need for unplanned spending on expediting processes.
- Demand: IBP for Demand uses time series modeling to analyze historical data, taking seasonality and trends into account. It improves accuracy and efficiency by integrating with SAP S/4 in real time to bring in transactional data, generate alerts if demand targets are not met, and enable demand sensing to improve near-term forecasts. IBP for Demand also lets users plan manually in Excel, supporting transparency with wide data accessibility.
- Supply Chain Control Tower: The Supply Chain Control Tower helps connect the components of SAP IBP, providing a visual interface with centralized information to notify users about overall supply chain disruptions. It is designed to help partners access the data, enabling collaboration within and outside of an organization. The Supply Chain Control Tower includes what-if analysis and decision-making tools for the supply chain, highlighting KPIs and emphasis on visual displays.
Implementation Benefits for SAP IBP
SAP IBP provides valuable information about both demand and supply, enabling organizations to better manage their supply chain – especially in terms of demand changes and inventory levels. Demand and supply uncertainty present challenges for effectively meeting customer expectations. SAP IBP can be a highly effective supply chain solution, providing speed, accuracy, and opportunities to expand collaboration.
SAP IBP for supply chain can help companies quickly meet the high expectations of their customers and changes to demand based on predictions and patterns. Machine learning algorithms and automation help respond to changes by quickly noticing events outside of the norm, providing what-if simulations and alerts based on analytics. This real-time solution allows businesses to react with agility and speed, keeping supply chains efficient and moving processes along effectively, while maintaining the most cost-effective inventory levels. In times where uncertainty has increased dramatically, flexibility through speed makes SAP IBP an invaluable tool.
In SAP IBP, predictability can be easily improved with adjustments to plans based on current data, using predictive modeling and demand sensing. Advanced analytics and machine learning elements can help with strategic operations across product portfolios, using a statistical baseline for forecasting and taking external data into account for optimized planning. Accuracy helps lower inventory issues like stockouts, controls the bullwhip effect, and keeps customers happy by meeting expectations.
SAP IBP enables collaboration and visibility, helping businesses work with suppliers and manufacturers more easily. This solution helps organizations align on deliveries, commitments, and priorities through process orchestration. Analytics help with decision making, and inventory target setting helps keep on track towards targets within budgets. Visibility into work in progress, shipments, and availability keep disruption to a minimum with real-time information, even providing a news feed for social collaboration and communication among components.
While SAP IBP is a newer solution in the market, its innovative ability to provide speed, accuracy, and collaboration through flexible components make it a top solution. Implementation is best achieved by taking time to understand your specific needs, create a solution blueprint that supports your business, and manage organizational change so that the solution gains buy-in with well-trained users. Clarkston can help you effectively execute your supply chain technology implementations so that you can make the most of your investment.
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Contributions by Courtney Loughran