The planning capabilities of SAP Integrated Business Planning (IBP) for Response is always compared with a much matured and stable product, SAP Advanced Planning & Optimisation (APO). While SAP plans to discontinue the support for APO in the near future, the businesses have now started looking forward to IBP for Response as a potential replacement for planning in order series. This module is yet to reach the pinnacle of its maturity in terms of functionalities, but the progress has been rapid and the road map looks stronger. Further, it looks promising in terms of speed and flexibility which was not possible in APO.
In this blog I will explore features of IBP for Response & Supply. This includes integration of IBP for Response with external systems and the time series counterpart of it followed by the planning operators being offered
Integration of Forecast & Transactional Data
The supply planning algorithms in the time series model when coupled with the forecasting solution could deliver an end to end S&OP solution for efficient tactical planning in the mid to long term horizon. The curiosity intensifies around the integration with ECC, coherence of time series data into order based planning, and the progression thereafter.
Presently it is possible to integrate IBP for response to an ERP system via SDI connection which can use either file adapter to upload data via flat files, or ABAP adapter which sits on the ECC server. As of the latest 1902 release, SAP IBP response support multiple integration profiles which would then mean it is possible to integrate several ERP systems or file servers to individual planning areas. This is a step forward as it allows to have multiple active planning areas which was not feasible until the last release. However, it is still not possible to integrate multiple ERP systems to one planning area, this is currently on the roadmap.
While the long term vision from SAP is to offer a unified planning area where time series and order series data can coexist, we do not see it happening anytime soon. With several issues with the existing unified planning area, SAP is now discouraging the partners and the customers from using one, until a seamless collaboration is made available. However, for now there is a workaround in place to integrate the demand from time series into order based planning area using the DISAGG operator which is now the SAP recommended best practice. With the progression in time once the much awaited unified planning area is made available to us, both time and order series key figures could be available in one single planning area. The master data, sales orders and other order – based transactional can be uploaded using file adapter or integrated with ECC via ABAP adapter. Once the forecast and customer orders are available in the order based planning area, the platform is laid.
The Demand Prioritization App which is made available as a part of the order based planning is a powerful tool which is an enhancement of the demand prioritization in APO – Capable to Match. IBP offers rule based demand prioritization to suit the business requirements and give the users ability to remain agile and flexible in terms of priorities in which demands are fulfilled across the network. In case of supply shortages, demands are fulfilled based on priorities assigned to them.
A rule comprises of one or more segments which form the building blocks. These segments are nothing but selection conditions to group available demands based on pre-defined conditions such as Demand Type, Customer Priority, and Order Quantity etc. The conditions need to be configured while setting up a rule. Within a segment, there is a possibility to sort demand based on standard attributes. Once the segments are defined and sorted based on attributes, they can be arranged based on priorities.
The following figure depicts pictorial representation of a Demand Prioritisation Rule.
Due care needs to be taken to ensure all demand is captured within a rule;
Once the Demand Prioritisation Rule is defined, it is then possible to view demands by priority in an app.
View Demands by Priority is quite a handy app when the planners would need to know how their supply chain is being modelled. It is now possible to quantify the demand based on priority and evaluate potential impact due to unfulfilled.
The subsequent planning runs within IBP order based planning feeds on the Demand Priority rule to achieve desired results.
Constrained Forecast Run
The Constrained forecast run could be rule based Heuristics or Optimizer which works on the unconstrained forecast to generate a feasible plan taking into account component availability, supplier constraints and capacity constraints. This algorithm doesn’t take sales orders into account.
This is the first bit where IBP could showcase its response capabilities. Despite achieving an accurate in-house plan, customers often face a setback due to component availability. This may be due to capacity constraints at the supplier end, lead times, or any other supply chain disruptions. IBP for response considers all such constraints and supply situations across the network.
SAP IBP for Response when integrated with SAP Ariba facilitates better collaboration which will eventually help to capture the right information in terms of component availability from the Vendors.
Once a constrained forecast is generated based on the previous runs, customer can use a COPY operator to copy the constrained forecast as the allocation quantities.
This enables SAP IBP for response to confirm sales orders against allocation quantities, derived from the constrained forecast run. It is important to define the product allocation profile in the location product master. This will enable the sales order to consume the open allocated quantity. IBP for response provides a true end to end visibility as the delivered or cancelled sales order is no longer visible in the IBP, the product allocation is adjusted to reflect the true picture.
While confirmation run in IBP for response and supply is the basic planning run to plan the sales orders, it also considers open forecasts, fixed requirements and receipts (stock) from execution and safety stock. When necessary, multi-level receipts are created, considering different valid sources of supplies available. Constraints considered in the confirmation run are Resource Capacities, Supplier Commit quantities, Material availability and lead time, Product Allocations. Additionally, the confirmation run creates new confirmation proposals for sales orders.
In addition to this the simulation capabilities enables the business to run scenarios and determine the system response to inflated or last minute customer orders, in order words, be “responsive” in a true sense.
In a typical planning process, it is the role of a planner to analyse the results supplied by constrained forecast run. View Demands by Priority app comes handy to determine how demand across supply chain network has been treated. In addition to this, gating factor analysis is a feature which translates system related issues into definite messages to provide a snapshot of all the constraints which might prevent system from fulfilling a particular order. Several types of gating factors are available such as Supplier constraint, Lead time constraint, Product allocation, resource etc.
These factors can be acted upon by the business users through ‘View Gating Factors’ app without much intervention from system administrators.
Further, the ‘Analyse Supply Usage’ and ‘View Projected Stock’ apps play a significant role in identifying the consumption of receipts and determine deviation from inventory on hand, respectively which are important KPIs in the supply chain
Last but not the least, the deployment feature takes care of the issues related to distribution in case there are any mishaps on the supply side. Any such shortcomings can be addressed via deployment run which essentially confirms the supply plan generated by the response engine.
As a prerequisite to deployment run, we need to define the order categories which are Available-to-Deploy (ATD) in the ATD profile. With this as a reference, the deployment engine confirms the plan across the supply chain network, however doesn’t have capability to generate any planned orders.
The IBP for Response application, based on features discussed above, enables a tight integration across all the aspects of supply chain planning to deliver a high quality, state of the art responsive solution which caters to several disruptions.
However, there is definitely room for improvement in terms of missing functionalities like shelf life planning & interchangeability, and few other shortcomings such as the inability to run jobs from excel views while working with scenarios. Predefined KPIs to measure supply chain performance could be an added value while executing scenario.
Having said that, IBP for response has gained much needed attention from SAP over past few months which looks promising and without doubt we can see the maturity curve growing exponentially in recent times.
Consultant - Olivehorse Consulting