292 Integrated Business Planning Overview and Preview of The New Demand Application PDF

Integrated Business Planning Overview and Preview of
the New Demand Application

Tod Stenger
SAP
Agenda
Integrated Business Planning Overview

Integrated Business Planning for Demand: Introduction
Demand Sensing
IBP for Demand: Details
Demonstration
Wrap-up
2015 SAP SE or an SAP affiliate company. All rights reserved.
Integrated Business
Planning Overview
Why a New Solution for Supply Chain Planning Is Needed

Complex and granular data models
encumber what if analyses
Supply chain planning

systems in the market
tend to be fragmented,
requiring many
interfaces
Customer-centricity and
the need for speed
SPEED
Disconnect between
planning and execution
system
SPEED
Duplicate data transfers

between planning and
analytics systems encumber
performance
SAP Integrated Business Planning Solution Architecture
Built on SAP HANA

Demand Networks require real-time
monitoring and a focus on short-term planning
One Harmonized Data Model

Avoid any latency due to integration efforts
and leverage the SAP ERP data model
New Planning Algorithms

Leverage predictive analytics (e.g., demand
sensing) algorithm in combination with
optimization
SAP Integrated Business

Planning
Enhanced User Experience
Sales & Operations Planning
Inventory
Demand
SAP Supply Chain

Orchestration
Response and Supply
SAP HANA Platform
Suppliers
Customers
Carriers/LSPS
Manufacturers
Business Partner Portal
Introduce state-of-the art user experience with

communication capabilities (SAP JAM) and
MS Excel Spreadsheets
Buyer Supply Chain Collaboration

Application
B2B,High Availability, Open
Cloud-First Approach
The solutions will be provided in the SAP
Cloud, but will also be made available onpremise
Integrated Business Planning powered by HANA

A Single Data Model to Swiftly Drive Collaboration and Action in Your
Business
Sales and Operations: Drive your business
with one set of numbers
Supply Chain Monitoring and

Integrated Business Planning
Supply Chain Control Tower
IBP for
sales and operations
Supply Chain Control Tower: Visibility
IBP for inventory
IBP for demand
Inventory: Master Uncertainty, drive

S&OP decisions to the Planners
IBP for response

and supply
SAP HANA Platform
Demand: Demand analytics, demand sensing. Forecast

Better.
Response and Supply: Master supply planning and response

intelligence
SAP Supply Chain Control Tower

Supply Chain Monitoring
Enable supply chain professionals to

navigate, analyze and profitably manage
the end-to-end supply chain in real-time
Increase end-to-end visibility
Integrated Business Planning (IBP)

User Experience
IBP for sales & operations
IBP for demand
IBP for supply
IBP for inventory
IBP for response

SAP HANA Platform
Increase on-time delivery performance to

customer
Decrease overall inventory levels while
reducing risk
Increase supply chain agility and reduce

supply chain cost
SAP Integrated Business Planning for sales and

operations
Deliver a cross departmental sales &

operations plan balancing the impact on
inventory, service levels and profitability
Create the optimal business plan to drive
revenue growth and increase market
share

User Experience
IBP for demand
IBP for supply
IBP for inventory
IBP for response

SAP HANA Platform
Effectively balance demand and supply

and attain financial targets
Increase speed and agility of planning
and drive most profitable responses
Improve forecast accuracy and on-time

delivery
SAP Integrated Business Planning for inventory

Optimize multi stage Inventory Targets to

most efficiently meet or exceed customer
service levels, fully considering
uncertainties like forecast error and supply
uncertainty.
Improve customer service levels
Maximize the efficiency of inventory

and working capital
Improve planner productivity,

standardize planning processes
Standardize the inventory target-setting

process at each tier within the supply
chain to feed operational plans
Reduce production and distribution

costs

User Experience
IBP for demand
IBP for supply
IBP for inventory
IBP for response

SAP HANA Platform
SAP Integrated Business Planning for demand

Gain full Demand Transparency for short-,

mid- and long-term forecasting by
leveraging demand sensing and statistical
forecasting methods
Develop more accurate mid-term

statistical forecasts
React faster to short term demand

changes with pattern recognition based
algorithms
Drive more accurate deployment of

product based on short term demand
Manage multiple demand signals
Collaborate to ensure the most

accurate forecast

User Experience
IBP for demand
IBP for supply
IBP for inventory
IBP for response

SAP HANA Platform
SAP Integrated Business Planning for supply

Create advanced supply planning

simulations for S&OP based on forecasts,
orders, and inventory or safety stock
targets.

User Experience
IBP for demand
IBP for supply
IBP for inventory
IBP for response

SAP HANA Platform
Simulate either constrained or

unconstrained production and distribution
plan, using heuristics or optimization
based algorithms
Multi level sourcing determination for
both distribution and Bills of Material
Development of rough cut capacity plan
in a times series bucketed supply plan
Simulation capabilities for scenario
planning
10
PLANNED (will supercede

IBP for supply in 6.0)
SAP Integrated Business Planning for response and supply

Fast, flexible supply planning supporting a variety of
approaches, suitable for many industries, including:
Support of tactical (rough cut) supply planning in
conjunction with IBP for sales and operation, as
well as operational supply planning capabilities
User Experience
Sales and Operations
Demand
Inventory
Response and Supply

SAP HANA Platform
What-if analysis of actual or hypothetical

changes to demand and / or supply
Pegging and gating-factor analysis
Constrained optimization and priority rules-driven
algorithms. Unconstrained demand propagation
and heuristics options as well
Optionally generate and provide allocations
to ATP, and reschedule sales orders
Production and distribution (deployment) use
cases
11
Benefits of Advancing on the IBP Maturity Curve

Metric
Inventory write-off
as % of revenue
% of Revenue Loss due

to stockouts
Improvement
-14%
0.29
0.25
-19%
1.0
0.8
+5%
On Time Delivery
(as %)
86.3
90.9
+8%
Forecast Accuracy
(as %)
76.8
Order Fulfillment
Lead Time (in days)
83.3
Best-in-Class Companies:
Aberdeen 2011
Experienced 81.9%
forecast accuracy level
for three months out into
the future
97.2% of orders delivered

to customers complete
and on time
Decreased cash-to-cash
cycle time by -.3% year
over year
-35%
6.24
4.06
Note: KPI performance improves with increasing best practice adoption from Low to High
Source: SAP Benchmarking 2012
12
IBP Solution Architecture
SAP Integrated Business Planning 5.0

SAP HANA
BW
Any other
system
Files
HCI
BPC
Out-of-the-box or
configured Integration
CRM
Web UI/https
ERP
APO
Excel
Sales/
Marketing
IBP Model & Engine

Attributes
Key Figures
Scenarios & Simulation
Predictive Analytics
Heuristics & Optimization
Process Management
Alerts
Web
Demand
Planning
Finance
SAP Jam
Mobile
Supply
Chain
Social Collaboration
Executives
13
Integrated Business
Planning for Demand:
Introduction
What Problems Are We Solving?
Top Business challenges

High market volatility
Variation in demand is increasing
Lean supply chains and demanding customers
Challenges in daily work

Poor forecast accuracy
Inefficient operations
Low service level and excess inventory
An unprecedented amount of data (or signals) is available today
to drive better decisions

15
SAP Integrated Business Planning for Demand
Sales & Operations Planning
Demand
Inventory
Response and Supply
SAP HANA Platform
16
Simplified Definition Integrated Business Planning for

Demand
Integrated Business Planning for

Demand
=
Traditional demand planning
+
Demand sensing/short-term forecasting
+
Predictive/forecasting analytics techniques
17
Demand Sensing
Integrated Business Planning for Demand

Demand Planning vs. Demand Sensing
Demand Planning is a demand planning tool that helps you to cope with the uncertainty of the
future, relying mainly on data from the past and analysis of trends
Demand Sensing is the science of making these forecasts more accurate/more profitable in the
short-term horizon, relying mainly on data from the present and recent past and analysis of patterns
Forecast
Demand Planning: E.g., executed monthly in weekly buckets

Demand Sensing: Generally done daily in daily buckets
Difference between short-term forecast and consensus mid/long-term
forecast
wk1
wk2 wk3 wk4
wk52
time
19
Demand Sensing Bridges the Gap Between Planning and

Execution
Years
Months
Weeks
Days
Long-Term
Medium-Term
Short-Term
Execution
Annual budgeting
Annual strategic
planning
Network design
Forecasts
Used
Annual Budget
Sales and
Operations
Planning
Demand
management
Demand
planning
Inventory
planning
Production
planning
Statistical Consensus
Demand
sensing
Deployment
Kitting/packaging
Order fulfillment
Logistics execution
Orders
Data Granularity
20
Demand Sensing Identifies Optimal Blend of Inputs to

Better Predict Demand
Weekly Adjustments
Open Order data
correlation
corrections
Output
Optimal blend by lag patterns
Bias Tracking
Controls
Intelligent forecast
consumption logic
Daily Disaggregation
Optimal weighting
and pattern
recognition
Daily outputs for execution

systems
Aggregated weekly or
monthly values for
planning and reporting
Bias and variability

calculations
Forecast patterns
Shipment patterns
Demand Signal
data patterns
21
What Planning Processes Does Demand Sensing Impact?

Illustration of the Different Planning Horizons
Deployment &
Transportation Decisions
Production & Packaging

Sequences
Material Purchasing
Future
week
22
Effect of Demand Sensing

East DC
East Daily Demand Trend
Daily Replenishment Schedule

with updated forecast
Weekly forecast of 40 units
Fri
Thur
Wed
Tue
Mon
National DC
West DC
Fri
Thur
Wed
Tue
Mon
West Daily Demand Trend
23
Effect of Demand Sensing (cont.)
Daily Replenishment
Schedule with updated
forecast
East DC
East Daily Demand Trend
Fri
Thur
Wed
Tue
Mon
National DC
Sales trends are picked up

with Demand Sensing which
updates short-term forecast
Weekly forecast of 40 units
West DC
Fri
Thur
Wed
Tue
Mon
West Daily Demand Trend
24
IBP for Demand: Details
Simplification What We Heard

Demand Planners arent and shouldnt be statisticians
We need to align our demand plan with our S&OP plan

Management
I really need to focus on adding business insights to the forecast

We need better input from Sales
Demand Planner
The system should pick the best statistical model
I need more powerful statistical tools

Data Scientist
26
Simplification What We Are Doing
Role-based UI concept
Local Demand Planner
Global Demand Planner
Data Scientist
Simplified UI concepts
Use of Excel as a planning front end
Mobile-ready HTML 5 UI
Use of Fiori concepts for user interaction
27
IBP for Demand 5.0

Pre-Processing algorithms:
Features
Substitute missing values

Outlier correction with interquartile range test and variance
test
Demand sensing algorithms (short term

forecasting)
Time series algorithms:
Statistical Methods (mid- / long-term forecasting)

Pre-Processing algorithms
Time series algorithms
Regression based methods

Integration with ERP and APO
Exception management
Key figure calculations

Aggregation/Disaggregation rules
Simple moving average

Weighted moving average
Single exponential smoothing
Double exponential smoothing
Triple exponential smoothing
Automated triple exponential smoothing with parameter
optimization
1st order exponential smoothing with adaptive alpha
Crostons method for intermittent demand
Regression based algorithms:
Fiori Apps and Excel as a planning front-end

Data model: Key figures and attributes
Multiple linear regression (MLR)
Combination of these algorithms

(similar to composite forecasting in APO)
or
Pick the best
User management and authorizations
IMPORTANT!
IBP 5.0 scope is focusing on Demand Sensing!
28
Manage Forecast Models

Define the Forecast Model and Steps
29
Demand Sensing Issue Fiori App

Investigate Strong Deviations Between Sensed Demand and Consensus
Demand
30
Excel UI
Leverage the Excel UI to Add Additional or Own Key Figures for Further
Analysis
31
Analytics
32
Additional Concepts Planning Area and Planning Level
Planning Level 1
Planning Level 2
Product Group
Product Group
Product
Location
Location
Week
Planning area = configuration/data

container
Planning levels = Data storage level
Not aggregates of detailed data
Week
Planning Area
33
Additional Concepts Calculations
Calculations:
CONSENSUSDEMAND
@LOCPRODCUSTWEEKLY
IF(ISNULL( "CONSENSUSDEMAND
@LOCPRODCUSTWEEKLY" ), "DEMANDPLANNINGQTY
@LOCPRODCUSTWEEKLY" , "CONSENSUSDEMAND
@LOCPRODCUSTWEEKLY" )
Ability to define calculations between key figures including default values

Planning area configuration (back end)
User calculations also done in Excel
APO Macros = Key figure calculations + Excel
34
Adoption Scenarios
For Current Demand Planning customers:

Insert IBP for demand to calculate short-term forecasts
Roll out to smaller business units that have not adopted APO DP yet
APO (Demand Planning)

Downstream
demand signals
Downstream
demand signals
Social Media
Demand
Signal
Management
Forecast
Downstream
demand signals*
IBP for demand
Forecast
adjustments
Master Data,
Delivered orders
Short-Term
Forecast
Master Data,
Delivered orders,
Open orders
ERP
(* Future)
35
Adoption Scenarios (cont.)
Use of IBP for demand (demand sensing) with APO (DP and SNP) and IBP for
inventory
APO (Demand Planning)

Downstream
demand signals
Downstream
demand signals
Social Media
Demand
Signal
Management
Master Data,
Delivered orders
ERP
Downstream
demand signals*
Forecast
Short-Term
Forecast
IBP for demand
IBP for inventory
Forecast
adjustments
APO (Supply Planning)

(* Future)
36
Adoption Scenarios (cont.)
Longer term vision:
IBP for sales and operations
IBP for response and supply
IBP for inventory
Integrated Business Planning for demand

(Including Demand Planning & Short-term forecasting & Predictive Toolbox)
Downstream
demand signals
Social Media
Forecast
adjustments
Downstream
demand signals*
Master Data,
Delivered orders,
Open orders
Demand
Signal
Management
Master Data,
Delivered orders
ERP
(* Future)
37
What About APO?
Support for APO 7.0 extended to 2025

APO integral part of SAPs Demand Management offering
This is a time of transition:
Not all features from APO are in IBP yet
IBP has features not in APO
IBP is currently only available on the cloud
SAP can help develop a roadmap for APO IBP
38
Demonstration
40
41
42
43
44
45
46
47
48
49
50
Wrap-Up
Where to Find More Information
SAP Supply Chain on SAP.com

SAPPHIRE NOW, Transform Your Supply Chain into a Demand Network (Hans
Thalbauer) (YouTube, June 2014).
SAP IBP, SAP Integrated Business Planning Solutions Overview (YouTube, July
2014).
Solution Explorer
SAP Integrated Business Planning for sales and operations Starter Edition
Education Courses: SOP200 and SOP300 (no specific IBP for demand courses yet)
http://help.sap.com/ibp50
52
Thank you
Contact information:
Tod Stenger
Director, SCM Solution Management
SAP America
tod.stenger@sap.com
2015 SAP SE or an SAP affiliate company.

All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an
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(or an SAP affiliate company) in Germany and other countries. Please see http://global12.sap.com/corporate-en/legal/copyright/index.epx for additional
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Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors.
National product specifications may vary.
These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind,
and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE or
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In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related
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Integrated Business Planning Overview and Preview of

the New Demand Application

Integrated Business Planning Overview

2015 SAP SE or an SAP affiliate company. All rights reserved.

Why a New Solution for Supply Chain Planning Is Needed

Supply chain planning

2015 SAP SE or an SAP affiliate company. All rights reserved.

Duplicate data transfers

SAP Integrated Business Planning Solution Architecture

Built on SAP HANA

One Harmonized Data Model

New Planning Algorithms

SAP Integrated Business

SAP Supply Chain

Response and Supply

SAP HANA Platform

Business Partner Portal

Introduce state-of-the art user experience with

Buyer Supply Chain Collaboration

Enhanced User Experience

B2B,High Availability, Open

Integrated Business Planning powered by HANA

Supply Chain Monitoring and

Supply Chain Control Tower: Visibility

IBP for inventory

IBP for demand

Inventory: Master Uncertainty, drive

IBP for response

SAP HANA Platform

Demand: Demand analytics, demand sensing. Forecast

Response and Supply: Master supply planning and response

SAP Supply Chain Control Tower

Enable supply chain professionals to

Supply Chain Control Tower

Integrated Business Planning (IBP)

IBP for supply

IBP for inventory

IBP for response

Increase on-time delivery performance to

Increase supply chain agility and reduce

2015 SAP SE or an SAP affiliate company. All rights reserved.

SAP Integrated Business Planning for sales and

Deliver a cross departmental sales &

Integrated Business Planning (IBP)

IBP for supply

IBP for inventory

IBP for response

Effectively balance demand and supply

Improve forecast accuracy and on-time

2015 SAP SE or an SAP affiliate company. All rights reserved.

SAP Integrated Business Planning for inventory

Optimize multi stage Inventory Targets to

Improve customer service levels

Maximize the efficiency of inventory

Improve planner productivity,

Standardize the inventory target-setting

Reduce production and distribution

2015 SAP SE or an SAP affiliate company. All rights reserved.

Integrated Business Planning (IBP)

IBP for supply

IBP for inventory

IBP for response

SAP Integrated Business Planning for demand