FMCG Company - IBP Implementation Part 2

FMCG COMPANY – IBP IMPLEMENTATION (Contd.) _

In continuation with the previous article published last week,(FMCG COMPANY- IBP IMPLEMENTATION (linkedin.com) ) let's go through a few more use cases of IBP in the FMCG Industry, the process flow of all the scenarios combined, and how IBP helped in creating a meaningful impact to the business.

Scenario 4: Scenario-based requirement propagation to vendors

·??????Business Need: While placing orders to vendors, there are constraints in terms of minimum order quantity as well as lot sizes for orders [If the requirement is 11 Kgs and minimum order is 20 Kgs then the business would end up ordering almost double of their requirement. Also, if the lot size is 10 Kgs and the requirement is 22 Kgs, then the business would end up ordering 30 Kgs].

Due to these constraints, there was a need to optimize the order qty allocation to vendors for materials that are sourced from multiple vendors. This called for the need for a custom logic that would automatically limit the number of vendors ordered from and automatically adjust the vendor share. Currently, this adjustment for all combinations was being done manually and was a time-consuming process.

·??????Approach: Custom Key Figure logic was built to handle multiple sourcing scenarios. The vendor shares and MOQ of each vendor were used to dynamically evaluate how many vendors the orders would be placed, and vendor shares were recalculated accordingly. The default vendor share was already present in the system and if that needs to be updated, planners could simply upload a new file with revised vendor shares.

[For e.g. if a material is sourced from 3 vendors in a 4:2:1 ratio, then in a normal propagation, the requirement would be split and ordered in this ratio subject to minimum order quantities. However, with the custom logic, if the requirement itself is very less, then the system would automatically change the sourcing to a single vendor and the revised vendor share, in this case, would be 1:0:0. This helps to avoid ordering from all vendors and end up with huge excess qtys]

Scenario 5: PO Quantity split to multiple delivery dates

·??????Business Need: Since the business was ordering materials for a horizon of up to 4 months, it was often observed that the plants ended up with excess stock more than the storage limit. This led to a requirement that the order quantity be split into 2 parts i.e. critical requirement would be delivered first and the rest of the requirement would be delivered after a few days. During these few days, the first batch of materials would be used up in production, thereby creating the required storage for the 2nd delivery. The material from the second delivery would then be used in the next production batch.

·??????Approach: This business need was converted to a need to split the order qty into 2 delivery dates based on the critical requirement and planner to have the visibility of both dates along with quantity. The delivery dates needed to be calculated as per the vendor lead times and the number of days between 1st and 2nd delivery. This would then be converted to individual line items in a single PO.

This requirement was fulfilled using a Custom logic using CPI-DS [Integration Layer] to calculate both delivery dates for each vendor-cluster combination daily with respect to the current date and assign the dates to the respective delivery quantities so that planners get visibility of dates in the planning view. Further, they can download the output and directly upload it into ECC thereby eliminating the need to process the line items for each order.

Overview of Automated Planning Process in IBP (All scenarios Included)

The solution delivered for all the scenarios mentioned above is through IBP. The below figure tells us how these scenarios form a flow in IBP in providing the desired result.

Data Flow between IBP and other systems:

For any tool to provide the required outputs and recommendations, data flow between systems is a vital part. In this situation, data flow between IBP and SAP ECC is a 2-step process where the first step is about providing inputs to IBP and executing it. After that, if any adjustments or manual inputs are needed, the planners can intuitively modify in and in the second step i.e. POs with delivery dates, reports, etc are generated.??(Refer below data flow)

Business Impacts/Benefits:

By implementing SAP IBP for the MRP process, the client was able to reduce manual intervention thereby saving 40% of the planner’s time. The 2-step process of load and execution took 30 to 40 minutes each monthly cycle for MRP by RM/PMs. Also helped in providing real-time insights via reports related to procurement/Inventory KPIs for business to take proactive actions.

Conclusion:

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