SAP Integrated Business Planning (SAP IBP) was launched more than two years ago as an extension to SAP Advanced Planning and Optimization (SAP APO). The two solutions are now basically on a par.
“Supply chain planning” and Oliver Wight are pretty much synonymous. Even though he formulated his concept of integrated business planning back in the 1990s, Wight’s approach of multidisciplinary sales and operations planning (known as S&OP), which integrates everything from marketing and sales to production and finance, is more relevant now than ever before.
“That’s because systems have matured,” explains Peter Bickenbach, head of the SCM Solution Hub MEE at SAP. While Wight’s style of strategic and tactical planning originally relied on 90% process consulting and only 10% support from IT systems, that ratio is reversing. In fact, Bickenbach puts the share of support now provided by IT solutions such as SAP IBP at around 40%.
Demand-driven MRP (DDMRP) is no longer just a vision either. “DDMRP spans the entire supply chain,” says Oliver Schuck, head of Supply Chain IOT Germany at SAP. “As such, it can identify decoupling points ahead of time and thus prevent the ‘whiplash’ effect.” This is an important advantage in light of the fact that – due to coordination issues – even minor fluctuations in product demand can have a huge impact on the order quantity in complex supply chains.
SAP IBP: Six Important (and New) Functions
SAP IBP is taking SAP ever closer toward delivering on the DDMRP philosophy. Supporting SAP APO in supply chain management, SAP IBP offers several unique advantages:
1. Best case: planning with different scenario versions
SAP IBP lets you plan and compare worst-case, best-case, and realistic-case scenario versions, pulling different master and transaction data to create the various versions. “In SAP IBP, planning takes a few mouse-clicks,” says Schuck. “With SAP APO, it is much more complicated.”
2. Gating factors: dealing with the unexpected
SAP expert Bickenbach describes the SAP IBP Response function as the “ultimate reward for planning.” Despite planning all their internal processes from sale to inventory in great detail, customers still cannot prevent the unexpected. SAP IBP identifies so-called “gating factors” – such as supplier bottlenecks and delays during transportation or in other internal processes – and uses predictive and network algorithms to pinpoint “gates” within the supply chain that could close unexpectedly or predict when they will close.
3. Predictive analysis: simulating future developments
Let’s say a company is planning on building a factory in Eastern Europe to expand into new markets. That means changing the entire supply chain to integrate new suppliers, different transportation routes, and different processes. Key questions will include: Which partners and processes will add the most value? How can we ensure that our investment in the new region pays off as soon as possible? And if we schedule an advertising campaign for the month ahead, how much might our sales volume increase by at short notice? “SAP IBP provides an easy route to creating and comparing simulations that cover the entire supply chain,” explains Schuck. For example, you can calculate up-lift, down-lift, and basic versions of a scenario and compare them using algorithms that predict how a marketing campaign will affect consumer behavior.
4. SAP Jam and SAP CoPilot: the benefits of collaboration
When the time of year comes around for companies to lay out their financial planning, various departments are involved, from marketing and sales through production. Can we produce the required number of pieces? Do we have enough suppliers? When and how do we need support from marketing? The SAP Jam collaboration tool provides a platform for orchestrating communication between departments, distributing tasks, driving decisions and discussions, and allocating people. In the future, a virtual assistant called SAP CoPilot will also be available. Applying natural language processing (NLP) techniques, it follows voice commands to access business content. “SAP CoPilot works on the SAP Fiori concept, just like SAP S/4HANA, SAP Cloud for Customer, and SAP PLM,” says Bickenbach.
5. SAP Ariba: communicating dependent requirements
According to Peter Bickenbach, the next big step will be integrating SAP Ariba into the supply chain. “Companies will be able to connect suppliers to their own network and inform them about dependent requirements from the SAP Ariba Network via SAP IBP.” Suppliers can then submit a quotation and turn on their advanced shipping notifications (ASN), thus committing to provide the corresponding deliveries. “EDI and fax will no longer be necessary. SAP IBP will take care of the entire process,” says Bickenbach.
6. SAP Leonardo is part of SAP IBP
When monitoring its energy infrastructure, Italian train company Trenitalia uses SAP IBP to plan “media” such as refineries. The Internet of Things (IoT) helps the company identify deliveries that are delayed or at risk ahead of time and adjust their planning correspondingly. Data from heat cameras shows whether equipment (such as cooling units) has failed, while sensors measure the flow rates of oil and other fluids. SAP Leonardo transforms this information into smart data for SAP IBP, which then visualizes the current status on a management dashboard. “SAP IBP is an integral part of SAP Leonardo,” says Bickenbach, who also sees a symbiosis between SAP IBP and SAP PLM – with its visualization of 3D data for parts requiring replacement – and SAP Predictive Maintenance and Service (SAP PdMS).
SAP is adding minor functional improvements to SAP IBP every quarter. For example, customers now have the option of constructing a root-cause analysis tree diagram. They can also compile an Excel spreadsheet showing the entire change history in the company’s planning process and containing comments that link to SAP Jam – all in the spirit of sophisticated, Wight-style integrated enterprise planning.