sap integrated business planning for sales & operations

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This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.

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Product Information

SAP Integrated Business Planning (IBP) – Sales and Operations Planning – 2018

In my previous blog SAP Integrated Business Planning (IBP) overview and its features presented. This blog dedicated to sales and operation planning process.

Defining S&OP /IBP …What Is it Really?

Planning Horizons and Detail Levels.

What is Integrated Business Planning?

“Integrated Business Planning (IBP) is the business planning process for the post-recession era, extending the principles of S&OP throughout the supply chain, product and customer portfolios, customer demand and strategic planning, to deliver one seamless management process.

What Is S&OP…Really?

A process led by senior management that evaluates and revises time-phased projections for demand, supply, product and portfolio changes, strategic projects, and the resulting financial plans over the mid to long-term planning horizon.

• S&OP is a monthly management process that ensures that the company is focused, aligned, and engaged in those efforts the management team collectively decides are the priorities of the enterprise
• S&OP deals with the continuous change that occurs in the business and is a process to effectively manage ongoing change. In practice, it is called a re-planning process.
• S&OP is owned by the GM or CEO. It is a cross-functional process and includes all the functions of the company. Correctly implemented, it is a demand and strategy-driven process.
• S&OP addresses the management of key company resources in support of anticipated customer demands and expectations, new product development, and company initiatives
• S&OP provides senior management control of the business. It is sophisticated simplicity resulting in an organized common sense.

Value of a Mature Sales & Operations Planning Process

Classic or Traditional or Academic S&OP or IBP

Phase 1: Product/Portfolio Review

• Where are we in the product lifecycle(s)?
• What are the competitive pressures?
• How are our product(s)/families performing compared to projections?
• What products are phasing out?
• What new products are planned?
• Conducted by senior product person. Participated in by individual contributors from the product, engineering, brand management and middle management representatives from all disciplines

Phase 2: Demand Review

• Everyone Participates. Senior revenue person conducts
• All Inputs are Valuable
• Consensus Means Consensus

Phase 3: Supply Review

• Produce/procure on schedule
• Produce /procure at the lowest reasonable cost
• Manage capacity
• Produce to forecast, order
• How do I buffer for variability?
• Conducted by senior supply chain person, Participated in by individual contributors in supply chain and middle management representation from all areas

Step 4: Reconciliation Review

• Compromises and concessions made
• Performance reports (KPI measurements) reviewed and supporting documentation prepared
• Recommendations documented and prepared for management decision
• Agenda for Management Business Review prepared
• Conducted by the S&OP process owner and participated in by middle management

Step 5: Management Business Review

• KPI review: < 30 minutes
• Recommendations reviewed and decisions made
• Conducted by the S&OP/IBP process owner and participated in by senior management as decision makers and middle management representatives from each discipline. Owned by Executive Management
• An approved plan is to be released to  execution

The Supply Chain Planning Maturity Curve

S&OP at SAP – What Specific problem are we solving?

• Plan across the organization in time
• Don’t have the right information
• Can’t easily test assumptions

Consequences

• Miss the quarter
• Lose market share
• Miss growth opportunity

Sales & Operations Planning Enabling Architecture

Sales & Operations Planning: Unified Planning Environment

• Single unified data model across Demand, Finance, Supply Chain to support both tactical and operational planning at any level of granularity & dimension
• Flexible process modeling
• Planning, Analytics and Collaboration driven off of this single model

Sales & Operations Planning: Scenario Planning and Simulations

Real-Time Planning & Simulation

• Consensus demand planning, rough-cut capacity planning, volume and revenue modeling
• Alternative what-if scenarios for rapid decision-making across multiple key figures and dimensions
• Constraints at both detailed and aggregate level, real-time aggregation and disaggregation
• Use parameter driven solvers to optimize plans and resolve issues

Sales & Operations Planning: Collaboration

Contextual Process Orchestration

• Contextually organize People, Documents, S&OP Process Steps, S&OP Data, Action items, Decisions, Alerts, etc. around the S&OP Process
• Define and orchestrate the S&OP process(s)
• Enable People to stay on top of relevant, contextual updates

Sales & Operations Planning: Visibility

Advanced Analytics

• Evaluation of multiple levers to shape profitable demand
• Faster identification of problems through better visualization
• Compare scenarios, track KPIs, monitor trends across multiple dimensions, granularities in real-time
• End-user personalization and sharing

Sales & Operations Planning: Enabling SIOP

• Achieve the Right Balance Between Inventory & Service Levels & Working Capital.
• Embed Optimized Inventory Targets into the Supply  Plan for S&OP
• Account for Variability in the Supply Chain

Sales & Operations Planning: Key Capabilities

• Process Orchestration – Define and manage your S&OP process(es)
• Version and scenario creation and management for simulation and what-if analysis
• Perform multi-level supply planning (Heuristic & Optimizer)
• Collaboration – Define and user groups, tasks, feed posts, and content ▪Alerts – Configure alert key figures for management by exception.
• Create historical copies of plans with plan snapshots
• Alerts- configure alert key figures for management by exception
• ABC segmentation calculations
• Configure and change the model and calculations
• Business network collaboration integration (maturity level 4+)
• Incorporate optimized inventory targets in supply plan (SIOP)
• Product Life Cycle (phase-in, phase-out)

Unified planning process flow: Internal and external processes

IBP for sales and operations – Demand Review: Process flow

IBP for sales and operations – Supply review – Heuristic: Process flow

IBP for sales and operations – Supply review – Heuristic: Process flow

IBP for sales and operations – Reconciliation review: Process flow

IBP for sales and operations – Management business review: Process flow

Summary: SAP Integrated Business Planning for Sales and Operations Planning

Best Regards,

Assigned Tags

Hi Lingaiah,

Thanks for the article. I would like to ask you, if I as a customer would like to implement only IBP S&OP and not other modules of IBP, what will I get ? I have checked through the learning hub materials and it seems there is no specific content dedicated to S&OP. However, one diagram shows that basic demand and supply balancing is offered with S&OP without inventory optimization or advanced algorithmic calculations with respect to demand and supply planning. Can you please elaborate? Thanks in advance.

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Please check the below link to get the complete information about sales and operation planning license features.

• Features of S&OP
• Features of the IBP Platform (Available to All IBP Applications)
• Apps and Tiles
• Planning Operators
• Forecast Algorithms

https://help.sap.com/viewer/6b0a6820ebf94ff4a15d68af6db7745b/1808/en-US

Detailed view.Kudos !! Thanks for sharing

Thanks for your message Anurag Tiwari

Thanks for sharing the information. It's really helpful.

Thanks for sharing the Insights.

I myself working in S&OP field, in the present job am using different independent systems like Internet Portal for Demand submission integrated with Longterm Planning of SAP and Disintegration of  aggreagte level of planning into article level  and using SAP for capacity management and then adjusting it according to available capacity, Excel, Qliksense for KPI'S and Reports always found it Lethargic and time taking. This information shared by you will be my begining step of getting in touch of IBP /S&OP . Looking faward for doing my certification in IBP. Thanks lot 🙂

Thank you so much for posting such a good overview on 'S&OP' with IBP. I am not IBP/APO consultant, I am more into operations/execution but I wish to know more about IBP. I have a few queries as given below, could you please help me understand that ?

1- In the process flow 'IBP for sales and operations – Demand Review' you have mentioned that 'Sales Planning/Sales Forecast' takes place out side IBP-2018. Is it still true for current version of IBP ? If yes, could you please elaborate it bit ? My understanding/expectations from IBP was that this should be possible there.

2- This is related to process flow 'IBP for sales and operations – Management business review' and process output 'Operational Planning'. Again, similar question, is it still true for current version of IBP that 'Operational Planning' is carried out outside IBP ? My expectations was that we can get feasible/short term 'Operational Plan' from IBP and that can be transferred to S4 and can be stored in the form of Independent requirement.

Thanks, Pankaj

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SAP IBP Sales and Operations Planning

How to maximize sales and profit with SAP IBP Sales and Operations Planning?

Introduction.

SAP IBP for Sales & Operations planning is a cloud solution from SAP which supports all components of an integrated Sales & Operations Planning process.

What it is ?

Sales and Operations Planning is a structured monthly process that aligns all functional areas under a unified set of assumptions to enable and coordinate decision making. It integrates demand, supply, operations, and financial planning into one game plan for business. It also links strategic plans to operational plans and attempts to provide a decision-making framework to maximize sales and profit .

Steps in Sales and Operations Planning

Key Benefits of SAP IBP S&OP

How can Krypt help you?

Krypt is an SAP preferred partner and has assisted in the success of global businesses across industries & geographies. We have helped businesses through the successful integration & implementation of  SAP IBP ,  SAP GTS ,  SAP TM  &  SAP EWM . If your organization is regularly required to plan supply chain activities on a weekly or monthly basis in advance, then Krypt can help you implement/integrate  SAP LBN  to quickly analyze & respond to any scenario in near real-time using an informed decision.

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Sales and Operations Planning Solution Strategy in SAP IBP

SAP Integrated Business Planning (SAP IBP) provides best practice content via SAP Best Practices to highlight how the various capabilities of SAP IBP can be utilized to achieve a successful S&OP process.

This best practice content can be used as a guide or as the starting configuration for a project.

The overall process flow modeled in the best practice solution is shown in the figure below. We’ll discuss each segment of the process flow in more detail in the following sections.

Demand Review

The demand review process within the S&OP has several sub-steps and data sources, as shown here.

Demand review covers a sequence of steps controlled through the process management capability. Planners also have access to this capability through the demand planner dashboard. As shown in below, the demand review involves the following sequence of steps:

• Product segmentation (on the left), which helps to determine the right demand planning strategy for each product.
• A sales forecast review, which may include a new product introduction as well. The sales forecast is stored as a key figure in SAP IBP and can be pulled for review in a Microsoft Excel planning view.
• A marketing forecast review, where the marketing forecast key figure is pulled for review into a Microsoft Excel planning view.
• An annual operations planning (AOP) review, which looks at the AOP key figure brought into a planning view.
• A consensus demand, which receives an input behind the scenes from statistical forecasting to receive the global demand plan.
• A final consensus demand plan, which is a key figure that serves as a standard input into the supply review process.

The next figure shows an example Microsoft Excel planning view with the data to perform the demand review. The chart also shows trends in the actual quantity.

Supply Review

The supply review process flow comes next and is managed through process management. The figure below shows an example planning view with the key figures relevant for supply planning.

The supply review begins with the inputs from the demand review and the behind-the- scenes inventory optimization. Let’s walk through the process:

• As a first step, the S&OP infinite supply planning heuristic is triggered to generate the capacity consumption output.
• You then can review the capacity situation by pulling in several key figures, such as the Capacity Supply, Capacity Consumed, and Capacity Utilization key figures, into a planning view.
• You can adjust the production and distribution plan based on the capacity review to come up with the desired plan.
• You can optionally make adjustments, run simulations, and store the results in scenarios. This flexibility provides you the ability to analyze whether alternatives could lead to better planning results and to take corrective actions for subsequent runs.
• The final plan, after supply adjustments, is used for the subsequent reconciliation review step.

The following figure shows an example supply review dashboard. Notice how, in this phase, the important key figures are related to the capacity and production.

Reconciliation Review

The reconciliation review process, as shown below, looks at the supply and demand plans and comes up with the agreed proposal before the final review by management.

The next figure shows an example dashboard used by planners during reconciliation review. This view normally includes all the different aspects of the supply chain: demand, production, capacity utilization, and so on.

Management Business Review

Management business review (sometimes abbreviated MBR), as shown below, is performed by management executives together with planners from all areas with the goal of coming up with an execution plan. The output from this meeting is critical and drives the implementation of the plan throughout the organization. For example, additional resources, additional shifts, or changes in contracts with vendors may be outputs from this phase.

The following figure shows an example configuration of a management business review dashboard. This dashboard displays several key figures including revenue, profits, and more.

Editor’s note : This post has been adapted from a section of the book SAP IBP for Supply Chain Certification Guide: Application Associate Exam by Parag Bakde and Rishabh Gupta.

Recommendation

Preparing for your SAP IBP for Supply Chain exam? Make the grade with this C_IBP certification study guide! From sales and operations planning to response and supply, this guide will review the key technical and functional knowledge you need to pass the test. Explore test methodology, key concepts for each SAP Integrated Business Planning topic area, and practice questions and answers. Your path to C_IBP certification begins here!

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SAP IBP FOR Sales & Operations

Importance of sales & operations planning.

In recent years, there has been a shift in thinking about S&OP and a move towards a paradigm that is better characterized as Integrated Business Planning. It is no longer about simply matching supply with demand or about chasing quarter-end or year-end financial goals or conversations focused on the supply chain function alone. S&OP in the age of IBP is about allocating resources (think of the 4Ms of Men, Machines, Materials and Money) to generate profitable responses to customer needs. This is accomplished by collaborating across all functions in an organization, led by senior management. It also means that S&OP process is no longer just about volumes, but value - and value is embedded every step of the way.

This new S&OP paradigm requires a robust and scalable database and platform functionalities such as what-if analyses and scenario planning. SAP's IBP provides such a platform to help companies adopt this new paradigm.

SOME KEY TRENDS AND CHALLENGES IN S&OP

• Need for effective cross functional engagement to overcome siloed planning (symptoms: functional goals, disparate perspectives, disconnected processes)
• Managing volatility: Ability to simulate effects of demand and supply volatility and collaborate on responses
• Need for timely, accurate, integrated data that is also easily scalable
• Ability to document plan assumptions, reasons/context of key decision

SAP IBP FOR SALES & OPERATIONS PLANNING CAPABILITIES

Unified planning environment & collaboration.

SAP IBP provides unified data model for cross business processes. This helps functions to re-align towards common organizational goals.

Information flow among business units are transparent & real-time. This means demand planners & supply planners can work collaboratively in alignment with organizational financial targets. This leads to effective decision-making during planning as well as operational phases.

SEAMLESS INTEGRATION AND ADVANCED DASHBOARDS & ANALYTICS

SAP IBP can be integrated seamlessly with other SAP / non-SAP IT systems, on-cloud or on-premise through SAP’s Cloud Platform Integration services. This enables rapid flow of data into a IBP’s Unified Data Model. Along with IBP’s Advanced Analytics & intuitive Dashboards capability powered by HANA, the planners can visualize key supply chain aspects in real-time and can take correct, timely decisions, which is vital for an effective S&OP process.

DOCUMENTATION & TRACKING OF PAST PLAN ASSUMPTIONS, KEY DECISIONS & REASONS

With IBP’s Integrated reporting, each S&OP cycle along with decisions, discussions, approvals can be recorded.

Retrieval of previous cycles' data along with various types of commentary can be easily done with preconfigured apps integrated within the tool.

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SAP Integrated Business Planning for sales and operations: What-if scenario planning

Make more informed decisions while collaborating more effectively across all key stakeholders in your S&OP process. From demand and supply through working capital, revenue and profit, SAP Integrated Business Planning for sales and operations helps you gain foresight by having the best insight and process control.