SAP Integrated Business Planning Series - Quick Response to Volatile Demand

SAP integrated planning is state-of-the art platform for real-time, integrated supply chain planning – built on SAP HANA cloud. The solution is being developed to deliver all integrated planning functions across sales and operations, demand, demand driven MRP, demand sensing, inventory, supply and response planning in one unified data model. This unified data model also enables one stop shop for dashboard analytics and real time monitoring of supply chain performance.

SAP is continuously delivering new functionalities, user experience and improved KPIs in real time dashboards in quarterly releases.

In this blog I will focus more on SAP IBP response planning for two reasons.

1.   COVID-19 pandemic has shaken up the ground and challenged supply chain principals and assumptions. It essentially taught us once again how to prioritize demand in needs category over wants category.

2.   Frequent re-planning to keep up with global supply chain dynamics is becoming a norm

SAP IBP Response planning as name suggests is a solution built to quickly respond to demand changes by matching and pegging the demand with available as well as adopted supply. It does so by using different business rules for supply sourcing, demand prioritization and allocation ( based on forecast share per location product ).

Here are few sample use cases:

Supply simulation for true response

Running simulation for different real-life scenarios and determine the supply chain system response to inflated or rush orders or supply disturbance.

Analyze demands

To quantify competing demands based on priority and analyze potential impact due to unfulfilled or late fulfilled demand.

Supply constraint analysis

Gating factor provides snapshot of all constraints which might prevent system from fulfilling a particular order. Planners would know how their supply chain is modeled with the help of end to end pegging of a demand to supply elements across chain.

View Projected Stock and related KPIs

To determine demand deviation from inventory on hand across supply chain.

The above use cases are covered in three distinct processes of IBP supply and response planning ( order based planning):

1.   Supply and Allocation planning using constrained forecast run:

This process essentially derives the allocation ( constrained forecast) from unconstrained forecast and creates supply plan based on prioritized demands and supply chain constraints. The customer demand (sales order) is excluded in this run. Based on business needs, maturity, data preparation and appetite, heuristic or optimizer based engine can be used. 

2.   Confirmation run for Response planning

This run happens to confirm sales orders against allocation quantities which are derived from the constrained forecast run. The sales order confirmation and adopted supply plan is created based on prioritized demands, allocation and supply chain constraints.

System always provides true picture of sales order confirmation by eliminating closed / canceled / delivered sales order and respective allocation

System also provides wide range of flexibility to model different supply constraints. For examples

·        To model component availability issues due to vendor constraints, Ariba collaboration with IBP response can be investigated.

·        Storage constraint (which is still not available as part of standard offering) can be modeled using supplier constraint.

3.   Deployment planning:

Supply plan can not be set in stone due to last minutes changes in orders or unplanned supply disruptions. To address such short term execution issues a viable short term distribution plan is needed against which available supply can be distributed in network to fulfill customer demand. SAP IBP Response Deployment engine confirms the plan across supply chain network but doesn’t generate any additional supply at plant(s). It adjusts all supply proposals and order confirmation across distribution network based on prioritized demands, allocations and supply chain constraints.

4th process to complete the loop

Truck load building (TLB) is on SAP’s road-map and will be available in next few releases. But it is worthwhile to look at SAP IBP time series optimizer engine and model the required functionality in existing landscape provided there is such pressing need. The orders generated by deployment engine in step 3 can be fed to TS engine to generate (TLB) orders. Especially during this pandemic, logistic companies can investigate such innovative ideas to optimizes their fleet capacities.

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In the next Blog I will cover few tips and tricks to fast pace the SAP IBP response implementation. I will also touch upon topics like data integration, forecast consumption and exception management capabilities of SAP IBP Supply and response