add value to your Advanced Planning and Optimization (APO)?

Transcription

1 WESTERNACHER KNOWLEDGE SERIES WHITEPAPER How_ Adding value to your supply chain with innovative solutions How does SAP Integrated Business Planning (IBP) add value to your Advanced Planning and Optimization (APO)?

2 EXECUTIVE SUMMARY Integrated Business Planning: The key to business success. IBP will become an important element in many company strategies. The old S&OP processes may need to be reviewed, to consider not only Demand and Supply, but also additional information, such as R&D, marketing and financial figures to better support strategic decisions (the objective of Integrated Business Planning). Essentially, companies that successfully execute IBP achieve greater operational and financial benefits than those that do not. Organizations are facing new challenges and difficulties every day due to globalization and volatility in the form of ever-changing supply lines and unpredictable demand situations. Businesses wish to monitor and adapt to changes to their supply chain and the potential risks and opportunities that they create, whilst evaluating the impact and possible actions in real time. This article addresses questions related to the co-existence of SAP APO and IBP in an IT system landscape. A common misconception is to think that SAP IBP is replacing SAP APO. Even if that is the case, IBP has the potential to bring additional value to your IT system landscape, which can include a SAP APO system. Keep up with shifting business demands

3 How does SAP IBP add value to your APO? More often than not, we get questions from customers such as: Do we need SAP IBP if we already have SAP APO? Could you provide us with a comparison between APO and IBP? Can IBP co-exist with APO? Are all functionalities in APO already migrated into IBP? How do we move from APO to IBP? Is IBP just a new APO? A common mistake is to think of IBP simply as a successor to APO. Both systems are part of the SAP Supply Chain Management suite, but IBP is not just an APO in the cloud. Since the development of SAP APO, technology and customer requirements have evolved. After various SAP IBP implementations and with more than 10 years experience in implementing APO, we can say that IBP brings additional value to the existing Supply Chain processes through: User-friendly interfaces (web browser and MS Excel) reducing resistance to change Easy integration of SAP IBP with SAP and Non-SAP systems Flexibility in building customized supply chain models, without a pre-defined set-instone process Speed in performing what-if scenarios Possibility to collaborate with peers in a more efficient way. Advanced functionality and integration In terms of functionality, there is not a one-toone relationship between APO and IBP. SAP IBP includes functionalities such as Demand Sensing or Inventory Optimization (using the SmartOps algorithms) that will never be on the APO platform. Some functionalities like APO-CTM, have been redesigned when they have been moved to SAP IBP (response module). Other functionalities that are part of SAP APO, like production scheduling (PP/DS) and some ATP functionalities, will be integrated into S/4 HANA and not in SAP IBP. APO will still be covered by SAP maintenance until 2025, but is no longer part of SAP s long-term development plans. If you have an S&OP process with the desired level of maturity and without any major pain points running on APO, there s no reason to start an SAP IBP implementation just because of this shift. Unfortunately, this is not the situation in which most of our customers find themselves in. Changes in the market or within an organization have brought disruptions or additional requirements in the S&OP process implemented in SAP APO years ago: Companies now require an easier and faster way to integrate their S&OP processes Businesses are under pressure to reduce their inventory to provide additional value to stakeholders Companies require visible financial information in their S&OP process to make more educated Supply Chain decisions SERVICE LEVEL

4 Building your IBP roadmap. Defining your business needs. There s no one size fits all solution for an S&OP initiative and you will find a full list of alternative scenarios at the end of the article. With our experience and expertise, we can provide guidelines for our customers to efficiently improve their S&OP process. When starting a new S&OP IBP initiative you always need to keep in mind its three main components: Process, People and Technology. + + PROCESS PEOPLE TECHNOLOGY The definition of a roadmap can be summarized through these steps: 1. Maturity evaluation of the IBP process, organization and system landscape 2. Identification and tackling of current pain points and definition of future targets 3. Definition of the process, metrics and organization in line with the business strategy to support decision making 4. Alignment of the initiative to existing and interdependent projects 5. Continuous measuring process after the implementation, to evaluate results and provide and reinforce a continuous improvement culture. IDENTIFYING THE RIGHT IBP MODULES FOR YOU PAIN POINTS (EXAMPLES) IBP MODULE IBP Demand IBP Inventory IBP Supply & Response IBP S&OP IBP Control Tower Jam Poor customer service (low fill rate) High inventory Stockouts Supply Chain scalability Missing collaboration (siloed thinking) Lack of Supply Chain visibility

5 SAP IBP. Example scenarios. Example A: SAP IBP used as a consolidation tool Some of our customers experience lack of visibility across their supply chain and they are looking for a scalable system that could allow them to continue growing through acquisitions without any major disruption to their business processes. In these cases, IBP is used to consolidate information that could be coming from different sources: Systems containing different types of information (e.g. a CRM, ERP, APO, SRM) Systems containing the same information from different parts of the Business (e.g. APO, JDA) SAP IBP can support the integration of a scattered IT landscape to run an integrated S&OP process. The IBP modules of major interest for customers in such cases, are the S&OP and the Control Tower module (depending on the requirements and planning horizon). PLANNING HORIZONS, SIMPLIFIED PLANNING HORIZON SAP APO JDA YEARLY Demand Planning Demand Forecasting QUATERLY Supply Network Planning Distribution & Inventory Planning MONTHLY WEEKLY Deployment Production Planning Production Purchase Planning DAILY Global ATP Intelligent Fulfillment Fig.1 SAP IBP consolidating two different planning tools

6 SAP IBP. Example scenarios. Example B: SAP IBP fulfilling missing functions Other customers are experiencing poor delivery performance, with stockouts and correspondingly high inventory levels. In these cases they are investigating new functionalities that the SAP IBP tool can bring to their current planning process. SAP IBP contains tools that are not available in SAP APO. A classic example being IBP for Inventory using SmartOps algorithms. In these cases, customers will continue to use their APO systems and integrate IBP to their landscape to get the required functionalities. This scenario can be used when the main pain points are Pressure in inventory reduction, Need to reduce forecast accuracy or perform demand planning in the short-term. Therefore, the modules that are an appropriate fit here are IBP for Inventory and IBP for Demand. Other than the given example, there are several other instances where SAP IBP holds a clear-cut advantage over SAP APO. The same instances and scenarios are iterated in the table below. PLANNING HORIZONS, SIMPLIFIED SAP IBP PLANNING HORIZON YEARLY QUATERLY MONTHLY SAP APO Demand Planning Supply Network Planning Deployment Supply Chain Control Tower IBP for Sales & Operations IBP for Demand IBP for Inventory IBP for Supply & Response WEEKLY Production Planning DAILY Global ATP Fig.2 SAP IBP for inventory used in combination with SAP APO

7 Start your transformation journey. With the IBP experts of Westernacher. About Westernacher Westernacher has been one of the early adopters of SAP IBP and we are happy to help you explore how it can improve your S&OP process. We can help you define a roadmap for your future system landscape, including full or partial SAP APO and IBP. About the author Vittorio Cotroni is an experienced consultant and the SAP IBP team Lead in Europe at Westernacher & Partner Consulting. Vittorio has been working with SAP APO and ECC since 2001 and with SAP IBP since the end of 2014, with many successful implementations. Westernacher Consulting AG Im Schuhmachergewann Heidelberg, Germany Phone Fax planning@westernacher.com Author Vittorio Cotroni Follow us on Copyright 2017 Westernacher Consulting AG. All rights reserved.