THOUGHT LEADERSHIP ARTICLE
Make your supply chain more resilient with SAP IBP
Digital is a prerequisite to making your supply chain more efficient. The first foundation stone is planning, by deploying a S&OP process. The SAP IBP addresses this need - and many others.
The health crisis has shown that the supply chain is a key item in the organization of companies, and it must meet four major challenges:
• Knowing how to adapt to fluctuations in demand, linked to the volatility of the market.
• Ensuring that the partner teams within the company are aligned: marketing, sales, production, finance, etc.
• Offering extended visibility from order to delivery.
• Planning, in order to better respond to demand.
A digital supply chain strategy responds to these challenges. It is based on advanced simulation and planning tools, and massive process automation. It needs to be accompanied by an evolution in the organization, to focus on customer demand.
The foundation stone of the supply chain remains planning. This is where a digitalization strategy should start. More specifically, by deploying a S&OP (Sales and Operations Planning) process.
The S&OP process aligns the goals of production, finance, and sales, with a common plan and clear roles for each. A S&OP is situated between long-term strategic plans and short-term production plans. It provides a 12-24 month view of demand and the capacity to meet it.
SAP, the digital supply chain specialist
SAP offers a wide range of solutions to help companies manage their business and their supply chain: ERP, WMS, TMS, MES, etc. But also planning solutions: SAP Analytics Cloud for financial planning, and SAP Integrated Business Planning (SAP IBP) for demand management and strategic planning. This cloud offering is based on the SAP HANA in-memory database. It has six components:
• Demand Planning: medium- and long-term demand forecasting.
• Sales and Operations Planning: the heart of the S&OP process.
• Inventory Optimization: calculation of inventory requirements and optimization.
• Supply Chain Control Tower: to quickly raise any alert.
• Response and Supply: response to short-term changes.
• DDMRP: demand-driven material requirements planning.
On the technology side, SAP IBP offers a web-based interface for setting up and monitoring the solution, as well as for viewing overall KPIs. The planning process is carried out using a Microsoft Excel spreadsheet, which is controlled and supplied with data by SAP IBP. Finally, the collaborative aspect and task management are provided by SAP Jam.
A wide range of best-practice processes taken into account
SAP IBP provides several key features that will make planners' work easier. Demand Management takes care of medium- and long-term forecasting. If necessary, it is supported by Demand Sensing, in order to readjust short-term forecasts. What-if analyses can be used to simulate various scenarios, such as the impact on procurement, production, and inventory of a drop in company sales. One of the great strengths of IBP is that it offers 42 statistical models, adapted to a wide range of use cases, without having to resort to the expertise of a data scientist.
Other features will assist planners in their tasks. Alert management automatically reports any problems observed, such as a capacity problem. This allows the planner to quickly evaluate the scenarios that will solve the problem. Finally, Embedded Analytics offers the ability to create custom dashboards with key information. For example, the differences between sales demands and production demands.
A step by step implementation
Deploying SAP IBP remains a complex project, as it must be carried out module by module starting with demand management, to allow customer needs to be better met. Then a S&OP process is defined.
However, companies have certain constraints (financial, supply, production). It may be worthwhile to incorporate these constraints into your planning process. In order to take the company's constraints into account, the VISEO teams will get closer to the organization. This study allows us to define an algorithm based on machine learning and the required internal or external data sets.
Everything is deployed on a Cloud Engine installed at the hyperscaler of the company's choice (Microsoft Azure, Amazon Web Services, or Google Cloud Platform). The tool allows you to generate a pre-forecast that takes into account the organization's constraints, which will be used by SAP IBP to generate its own forecasts. A solution that allows companies to further refine their forecasts and plans.