Mastering Supply Chain Challenges: Revolutionizing Business with SAP Integrated Business Planning (IBP)

Today’s fast-changing world brings a wide range of challenges for the Business Supply Chain.? The most common challenges revolve around Demand Forecasting, Replenishment, Inventory Management, Logistics & Transportation Management, Supply Chain Visibility, Sales & Operational Planning, and lack of technology and innovation in Supply Chain Management Systems. ? An effective and robust Supply Chain Management System can provide a competitive edge, introduce new opportunities, and strengthen the market share of an organization.?

SAP Integrated Business Planning (IBP), as referred to SAP IBP henceforth, is a cutting-edge cloud offering running on SAP HANA Cloud to provide organizations with all the tools required to build and effectively manage Supply Chain functions. It is designed to provide solutions to address the challenges in Supply Chain Workstream providing easy to use and intuitive MS Excel-based planning interface which plugs into MS Excel as an Add-on.? It also offers SAP Flagship UX Fiori-based interface while providing collaboration within various workstreams involved in Supply Chain Planning. SAP IBP utilizes the master and transaction data in the back-end SAP S/4 system by using integrations managed by SAP Cloud Platform Integration-Data Services (CPI-DS) Middleware.

We will briefly look at above mentioned key challenges in the Supply Chain Management areas that organizations may come across and how SAP IBP addresses these issues:

Challenge:

Demand Forecasting: It is important to accurately predict customer demand as it is crucial for inventory optimization and production scheduling however demand forecasting can be challenging due to factors such as market trends, timing, and unprecedented local and global events.

Solution:

IBP For Demand: The Demand Planning Module helps in planning and forecasting the Demand by building a comprehensive Demand Plan. It is the starting point of the Planning process wherein by reading historical data pertaining to sales as per the time intervals (historical demand time series function), it recognizes the past behaviors and patterns and estimates the impacts of future scenarios using AI-based Heuristics. It utilizes delivered quantity, future ordered quantity, and confirmed quantity from the backend SAP S/4 system and calculates the sensed demand on a daily basis. It also notifies about Demand Plan Deviation using analytics. Improved Demand planning can translate to optimized inventory management and better customer service.

Challenge:

Inventory Management: To avoid low/high levels of inventory sitting in the warehouses or 3PL locations, effective management of inventory is required. It involves careful planning considering customer demand, lead times, replenishment, production schedules, and workforce availability.

Solution:

IBP For Inventory: After completing Demand Planning, inventory planning must be done. It involves the planning of safety stock and stock allocation at every checkpoint in the Supply Network. Factors such as demand, lead times, prioritization, and service level targets are considered. It enables an organization to optimize inventory levels aligned with Demand planning to ensure improved customer service while keeping the costs in check.?

IBP For Demand-Driven Replenishment: Using Traditional MRP (Material Requirements Planning) organizations often find themselves in a situation where they have too much stock of unwanted products or too less stock of an in-demand product or higher order fulfillment time. To address the issues associated with Traditional MRPs, SAP Introduced a new solution called Demand-Driven MRP or DDMRP in short, which utilizes data relevant to materials and utilization, inventory gaps, and helps build a replenishment strategy that is based on actual demand rather than classic forecast-driven planning ensuring the timely replenishment of key products maintaining optimized inventory levels of products according to their market demand.?

IBP For Supply & Response: It enables planners to build plans to cover demand with optimized inventory levels. It also helps to adjust the supply plans to respond to unprecedented events, and disruptions in the supply network and capture demand opportunities arising in the market due to unforeseen factors thus maximizing growth and revenue opportunities.

Challenge:

Sales & Operational Planning:? Sales & Operational Planning is a key area in Supply Chain Management. Organizations need an operational plan built in collaboration with other workstreams such as Finance, HR, and Production. The supply Chain Management Team needs the ability to analyze order fulfillment, perform product lifecycle management, detect patterns in lead times, and identify dependencies that can affect the service levels, and profit margins and ultimately translate into a financial impact.

Solution:?

IBP For Sales & Operations (S&OP): This module enables planners to build short-term (operational) and long-term ( strategic ) Supply Chain Plans in a collaborative manner with other workstreams. Using IBP S&OP, Planners can perform Product review to manage the product life cycle, Demand review to generate S&OP relevant plan and generate demand-based scenarios relevant to S&OP using S&OP Heuristic, Supply Review to review critical sources of supply, Demand-Supply Balancing to develop a supply plan and run what-if scenarios to identify the KPIs in demand-supply gaps and their financial impacts.?

Challenge:

Logistics & Transportation Management: Building or leveraging a robust logistics/transportation network for goods movement from suppliers to customers is a critical component in Supply Chain Management. It involves load building, route optimization, carrier management, shipment tracking, storage/warehousing, and dealing with customers spread across different regions/countries while adhering to local and global regulatory requirements.

Solution:

Transportation Load Building (TLB): Transportation Load Building is an operation planning process that is based on Order Based Planning. It enables the planners and users to group the planned distribution receipts and build optimized transportation loads thus leveraging the transportation resources at hand in the best possible way. Traditional methods may leave transportation equipment half or partially filled but using a cost-based load optimization algorithm in SAP IBP ensures optimized usage of transportation equipment.

Challenge:

Supply Chain Visibility: Monitoring the various workstreams within the supply chain network, receiving consistent updates, and the ability to visualize the various moving parts within a complex network is of utmost importance. Supply Chain Management (SCM) system should enable the key stakeholders to monitor and analyze the real-time information regarding production, shipments, transportation, inventory, and demand forecasts to make informed business decisions.

Solution:

SAP IBP Supply Chain Control Tower: This module provides end-to-end visibility across the Supply Chain Network. It provides Real-Time alerts, monitoring, exception management, and analytics to effectively perform management of the supply chain. It enables the user to build visualizations and drill-down capabilities to analyze the issues. It also offers case and task management to address and resolve issues in a collaborative manner.?

Challenge:

Lack of Technology & Innovation: In an organization where planning is not done with the help of new and innovative solutions, Planners work in silos using their own version of Excel spreadsheets with an older snapshot of data which may be manually loaded. This results in inconsistent and inaccurate plans that ultimately cost organizations fewer profits and higher lead times. Modern and innovative technologies utilizing cloud-based centralized architecture driven by Artificial Intelligence Heuristics can enable an organization to streamline supply chain planning functions in a consistent manner and help plan with near-real-time data in a centralized system where plans and consumption are visible among the teams with workflows, easier to understand analytics and alerting mechanisms.

Solution

SAP IBP (Integrated Business Planning): As mentioned earlier, SAP IBP is a cloud-based offering from SAP to address the above-mentioned challenges. It enables users/planners to collaborate in a centralized environment consuming one source of truth from a data perspective. The data is collected by SAP IBP using automated jobs pulling data from heterogeneous systems (SAP and/or Non-SAP Systems) in the background using integrations built on SAP CPI-DS middleware solution. SAP IBP delivers pre-built Artificial Intelligence Heuristics to help in various phases of the planning process. It can also be integrated with Analytics tools such as SAP Analytics Cloud ( SAC ) to develop stories and analytical apps by consuming SAP IBP data to facilitate decision-making and strategic planning.

Considering the above-mentioned SAP IBP modules and their features, SAP IBP can become a game changer for an organization in the Supply Chain Management domain. It addresses the issues in a traditional supply chain management system and provides users with all the tools to effectively manage the supply chain planning functions utilizing the modern cloud-based centralized architecture with an easier-to-use user interface powered by AI-based heuristics to achieve better planning, improved decision-making, visibility, and a competitive edge.