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SAP APO Versus SAP Integrated

Business Planning: Leading Advice


and Key Considerations for
Whether and How to Migrate to
SAPs New Cloud-Based Supply
Chain Planning Suite
Sachin Shetty
EY
Produced by Wellesley Information Services,
LLC, publisher of SAPinsider. 2015 Wellesley
Information Services. All rights reserved.
In This Session

Understand the new planning modules from SAP within the


context of real-world planning challenges
Hear the technology options available in the marketplace,
including features, functionality, and integration scenarios
Compare on-premise vs. cloud planning options
Understand applicable scenarios and transition path for moving to
IBP solution landscape
Get guidance on how to start assessing your specific situation
and ascertain the direction in which to go

1
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

2
Current Planning Challenges in the Marketplace
Organizations are facing new challenges and opportunities related to globalization and
volatility
Volatility has increased dramatically, with constantly shifting supply lines and
unpredictable demand
Businesses want to monitor changes in their supply chain and the potential
risks/opportunities they create, and they want to know impact and possible actions in
real time
Business Capabilities Business Issues

Response Poor services levels, less agility to respond to sudden supply and demand variability

Analysis Inability to measure and improve performance

Collaboration High operational costs, functions working in silos toward differing objectives

Decisions Inability to make rapid business decisions supported by real-time data

Efficiency Long planning cycle times, ineffective planning process

3
Current Technologies Do not Address These
Planning Challenges

Advance
Planning &
Optimization

Supply Chain Supply Chain


Event Visibility &
Management Analytics

Supply Chain
Execution

Significant investments in planning solutions and capabilities have not generated the
desired outcomes and the expected benefits
Supply chain technologies have always been developed with separate functional focus
and suffer lack of synchronization
Users have not been able to combine the power of analytics with planning
Event management has helped to understand the supply chain events but has not
transcended into re-planning to respond
Supply chain execution and planning have remained disparate, locally
optimized processes
4
Planning System of Record A New Paradigm

Plan

Simulate Optimize
Supply Chain Planning
System of Record

Respond Measure

Monitor

Planning solutions have to be recast considering the current market challenges and
leveraging technologies like cloud, in-memory, and mobile
Supply chain Planning System of Record will have to consider the convergence of
planning and execution capabilities to facilitate demand-driven, responsive, and agile
planning
Along with planning and optimization, analytics, granular data visibility, and ability to
respond appropriately to unplanned events needs to be an integral part of SCP System
of Record
5
Planning System of Record Solution Capabilities

Business Issues Solution Capability Business Capability

Scenario planning,
Poor services levels, less agility to respond
to sudden supply and demand variability
what-if simulation, Response
rapid re-planning

Inability to measure and improve KPI, analytics, reports,


performance optimization
Analysis

High operational costs, functions working in Information visibility,


silos toward differing objectives collaboration
Collaboration

Harmonized data model,


Inability to make rapid business decisions Analysis,
updated global supply
supported by real-time data Decisions
chain and financial data

Long planning cycle times, ineffective Simple user interface,


planning process remote accessibility Efficiency

6
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

7
SAP Integrated Business Planning Platform

Excel UI Web UI Fiori Apps


Supply Chain Monitoring

Supply Chain Control Tower

Integrated Business Planning (IBP)

IBP for Sales and Operations Planning

IBP for Inventory IBP for Demand

IBP for Response & Supply

SAP Cloud HANA Platform

IBP 5.0 is the latest version of the integrated business planning platform
IBP for Response yet to be released
All the components have common HANA platform and are available on cloud
Harmonized data model; components interoperate seamlessly
Users interact with the applications using Excel, Web, and Fiori-based interface
Excel is a Microsoft registered trademark. 8
SAP Integrated Business Planning Platform (cont.)
End-to-end visibility of supply chain data
Real-time integration with SAP data sources
Control Tower Detailed order-level information
Configurable analytics & alerts and case management

Demand, supply chain, and financial model at aggregate and detailed levels
Sales & Operations
Scalable scenarios and simulation
Planning Collaboration for transparent communication and record decisions

Statistical forecasting & statistical analysis of demand data


Demand Demand sensing and mid- to long-term forecasting
Automated, exception-based planning process

Efficiently position inventory to respond to uncertain demand & supply


Inventory Multi-stage inventory optimization
Inventory target recommendations

Generation of operational supply plan at order level


Rules-based, priority-driven solution for supply planning, allocations planning, and order rescheduling
Supply
Pegging and root cause analysis for seeking bottlenecks
& Response Rapid what-if analysis
Generate and provide allocations to ATP and reschedule sales orders

9
Integration Architecture
On Premise On Cloud

Tables or Standard
Extractors SAP IBP
SAP ECC
Flat File

HANA Cloud Integration


Standard
Extractors

SAP APO
Flat File HCI Agent Staging Tables Core Tables

BW
DSO

HCI can connect to any standard database or flat file data source directly
HCI updates data directly in SAP IBP tables
HCI provides export API, which could be invoked to write data back to on-premise
10
The Underlying Technology
IBP platform is based on HANA in-memory database
Gartner defines in-memory computing (IMC) as architecture where applications
assume all the data required for processing is located in the main memory of
their computing environments
Gartner has identified three styles of IMC applications:
Native IMC: The application is developed from inception on the basis of IMC
design principles
Retrofitted for IMC: Applications that were originally designed on traditional
technologies but are now re-platformed on top of an in-memory data
Hybrid IMC: Applications use IMC design principles and technologies only in
part, usually to store and process the most performance- or scalability-
sensitive application data, or to support real-time analytics
SAP IBP is a native IMC application. It has been developed specifically to
leverage the HANA database and hence provides the most benefit among the
different overlapping SAP SCP applications
11
IBP Enabled with HANA Addresses the New
Planning Paradigm
Plan for global and complex supply chains by improving the
speed at which the applications process complex data sets
Improved response times that help planners iterate through
multiple scenarios and models in real time
Allows planners to work collaboratively and interactively without
taking hours to complete the process
Leverage analytics for accurate planning and better insights
Work with granular data in supporting increased agility and rapid
decision making

12
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

13
SAP Supply Chain Planning Options
SAP APO provides a solid on-premise planning option while SAP IBP provides
a new-generation cloud-based planning option
Table below depicts at a high level the planning options for given processes/
functionalities (includes upcoming IBP 6.0 functionality)
These are key functionalities only; supporting capabilities differ between the
cloud and on-premise options

Process/Functionality Cloud (SAP IBP) On premise (APO/other)


Statistical forecasting, consensus demand planning IBP Demand APO Demand Planning (DP)
Demand sensing, short-term forecasting IBP Demand Enterprise Demand Sensing
(EDS SmartOps)
Aggregate supply planning IBP Supply & Response APO Supply Network Planning
(SNP)
Capable to match, demand-supply prioritization IBP Supply & Response APO CTM (capable to match)
Deployment planning None (planned for future) APO SNP

14
SAP Supply Chain Planning Options (cont.)

Process/Functionality Cloud (SAP IBP) On Premise (APO/other)


Rapid re-planning based on demand, supply or IBP - Supply & Response APO GATP + CTM + BOP
capacity changes; update supply proposal & orders
Unconstrained heuristics IBP S&OP, Inventory, APO SNP
Supply
Constrained heuristics IBP S&OP, Supply & APO SNP
Response
Supply planning optimizer IBP Supply & Response APO SNP
Sales & operations planning IBP for Sales and APO, BI
Operations Planning
Rules-based order promising, capable to promise None APO GATP
Inventory planning & optimization IBP Inventory (only FG Enterprise Inventory & Service
currently; BOM/RM to be level Optimization
added in future) (EIS - SmartOps)
SC metrics, actionable analytics, alerts, dashboards, Control Tower + IBP Supply Chain Info Center,
analytics-assisted response Response SAP Supply Chain Performance
Management, SAP Event
Management

15
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

16
Business Requirements Assessment and Roadmap

Organizations need to do a detailed assessment of their process and functional


requirements in the short, mid, and long term while developing their roadmap
for supply chain planning transformation
Several other factors like IS processes, technology/architecture, and business
alignment also need to be considered

Business Alignment

Process &
Functional
Alignment

IS Organization & Process Technology & Architecture


Alignment Alignment

17
Assessment Alignment Framework

Dimension Definition

Vision Vision states concepts, values and goals that might be


known and understood by entire organization.

Strategy Establishes how to achieve the proposed vision


through objectives and actions.

KPIs Defines and communicates strategic and process


indicators that might be implemented sot that the
targeted value generation, as well as directing
processes and people to the established vision.
Process Determines scope and defines future state operating
models and flows.

Technology Defines and implements tools to be used to support


the future state processes.

Organization Formalizes and disseminates, through the company,


roles and responsibilities of involved stakeholders.

People Skills and behaviors development, required for future


state implementation and successful transformation.

18
Systematic Assessment of Supply Chain,
Current, and Future State Is Critical to Define
Technology Roadmap
Customer buying behavior Horizons and buckets
ILLUSTRATIVE

Frequency planning layers


Right planning paradigm
Strategic trade offs

Time hierarchy

Variability/inventory strategy
Product and sale hierarchy

Agendas and dynamics


Supply chain archetype

Reference: EY copyrighted internal documents


19
Leverage Leading Practice for Supply Chain
Planning Implementations
Integrated Business Planning (monthly) Strategic SC Planning
(monthly, quarterly)
Product Mgmt Demand Business
Supply Review
Review Review Review
Network Strategy
Integrated Reconciliation, Financial Analysis and Integration

Inventory Optimization
Tax, SC Risk and Resiliency Considerations

Demand & Supply Planning (weekly, daily)


Supplier Demand Supply Customer
Collaboration Management Planning Collaboration

Scheduling and Order Promising (daily)


Order Allocation &
Detailed Scheduling
Promising

Reference: EY copyrighted internal documents

20
Assessment Outcomes Need to Be Converted to
Initiatives as Well as Prioritized and Sequenced
ILLUSTRATIVE
1. Process & Technology Assessment 2. Capability Gaps & Readiness

Capability
CapabilityGaps
Gaps:Integrated
North America
Supply Chain
Implications

Capability
CapabilityGaps
Gaps:Demand
Frequent changes are made to demand and supply plans

reacting vs. planning Latin America


Source
Inconsistent processes focused on
thru Pay
Management within standard lead times, -stabilizing
forcing focus on short
de
-term horizons
production and

Cross-functional causal factors are Implications


not fully understood or
Multiple demand plans incorporated to determine supply requirements

Capability
CapabilityGaps
Gaps:Material
Frequent changes are made to demand and supply plans

reacting vs. planning EMEA Management


Supply
Inconsistent processes focused on
thru Inventory within standard lead times, -stabilizing
de
Not all pertinent constraints are fully considered to determine
forcing focus on short -term horizons
production and
No clearly defined supply policy supply requirements
Cross-functional causal factors are Implications not fully understood or
Multiple demand plans incorporated
Wrong products to determine
are produced supply requirements
and purchased, resulting in

Capability
CapabilityGaps
Gaps:S&OP
Frequent changes are made to demand and supply plans
Low forecast accuracy
reacting vs. planning Asiathru
Plan
Inconsistent processes focused on
Pacific
Cash
inventory write offs or lost sales
within standard lead times, -stabilizing de
Not all pertinent constraints are fully considered to determine
forcing focus on short -term horizons
production and
No clearly defined supply policy Functional supply requirements
areas work towards individual objectives instead
Goal and accountability misalignment Cross-functional
of driving towards optimizing total cost causal factorstrade
vs. service are Implications
-offs not fully understood or
Multiple demand plans across the Wrong incorporated
products
entire supply to determine
are produced
chain supply requirements
and purchased, resulting in
Frequent changes are made to demand and supply plans
Low forecast accuracy Inconsistent processes focused on inventory write offs or lost sales
Demand requirements and/or within constraints
supply standard lead times, -stabilizing
de production and
Limited collaborative planning reacting vs. planning Not all pertinent constraints are are not
fullyfully
considered to determine
No clearly defined supply policy understoodFunctional
or incorporated forcing focus on short -term horizons
supply requirements
areas work towards individual objectives instead
Goal and accountability misalignment of driving towards Cross-functional
optimizing causal
totalability
cost vs. factorstrade
service are not fully understood or
-offs
Lack of advanced planning capabilities limit to optimize
Non -enterprise applications Multiple demand plans across
total cost vs. Wrong
the trade
service entire
-offssupply
incorporated
products
acrosschaintheare entire
to determine
produced
supplyandchain
supply requirements
purchased, resulting in
Low forecast accuracy inventory write offs or lost sales
Demand requirements Notand/or supply constraints
all pertinent constraints are are not
fullyfully
considered to determine
Limited collaborative planning understoodFunctional
or incorporated
No clearly defined supply policy supply requirements
areas work towards individual objectives instead
Goal and accountability misalignment of driving
Lack of advanced towards
planning optimizinglimit
capabilities totalability
cost vs. service trade
to optimize -offs
Non -enterprise applications across
total cost vs. service Wrong
the trade
entire products
-offssupply
acrosschaintheare produced
entire supplyand purchased, resulting in
chain
Low forecast accuracy inventory write offs or lost sales
Demand requirements and/or supply constraints are not fully
Limited collaborative planning understoodFunctional
or incorporatedareas work towards individual objectives instead
Goal and accountability misalignment of driving
Lack of advanced towards
planning optimizinglimit
capabilities totalability
cost vs. service trade
to optimize-offs
Non -enterprise applications across
total cost vs. the trade
service entire
-offssupply
acrosschain
the entire supply chain
Demand requirements and/or supply constraints are not fully
Limited collaborative planning understood or incorporated

Lack of advanced planning capabilities limit ability to optimize


Non -enterprise applications total cost vs. service trade
-offs across the entire supply chain

3. Initiatives Development
4. Prioritization and Sequencing
A1 Demand Planning Base Capability
Initiative Establish base capabilities in product demand forecasting leveraging advanced
Process Area Demand Planning
Overview technologies and utilizing appropriate planning parameters and data structures
Initiative Performance Impact Enablement Complexity Dependency
Issues / Challenges Initiative Outputs / Outcomes Benefits Categories
* Inability to apply statistical forecast methods and models to * Implemented demand forecasting system A1 Demand Planning Base Capability 3.7 4 4 4 4 4 2.3 2 2 2 2 2
Revenue Enhancement X 1 A15
generate a projection of product demand * Standardized processes and parameters Establish base capabilities in product demand forecasting leveraging advanced Low High Low High
Initiative
* Inability to effectively forecast product demand at varying Description
* User training (process and tools)
OpEx (manufacturing) X 1
levels of the demand hierarchy * Master data definition and refinement (if needed) A2 Demand Management Functional Integration 2.9 3 3 3 3 3 3.3 3 3 3 3 3
1. Site Planning
* Inability to differentiate baseline forecasting approach on
Standardize and align planning
* Data structure definition and refinement (if needed)
& scheduling processes, organizational structure and A1, A15
Standardization technology usage across all site OpEx (logistics)
planning entities X 1 Fully integrate governance, processes, technologies and data across all core demand Low High Low High
the basis of product demand characteristics * Detailed roles and responsibilities
* Inability to determine and apply forecast algorithm(s) best * Standard solution-provided performance measurementIntegrated
and # Initiative
2. DP Systems
suited for individual product demand characteristics
Evaluation, configuration and deployment
reporting capabilities
ofFinancial Planningtool
a demand forecasting
OpEx (procurement) 0 to replace the A3 Collaborative Forecasting 3.2 3 3 3 3 3 1.7 2 2 2 2 2
A1, A2, A15
Replacement existingmanagement
un-supported Integrate governance, processes, technologies and data between <Client> Demand Low High Low High
* Advanced performance detaileddemand planning
Sales
requirements &tool
Operations Planning0 A1 Demand Planning Base Capability
OpEx (SC planning)
(metrics, analytics, reporting and visualization) A2
A4 Capacity Planning Base Capability Demand Management Functional Integration 3.8 4 4 4 4 4 3.3 3 3 3 3 3
3. Collaborative Development of a process in which client collaborates with strategic customers in key A1, A5, A6, A15
* Impact assessment of POS data usage (pilot only) Integrated Business Planning A9 A10 Establish base capabilities in constraint-based capacity planning leveraging advanced Low High Low High A11
Forecasting markets in order to improve forecast accuracy Working Capital Efficiency X 1 A3 Collaborative Forecasting
Product Review Demand Review Supply Review Integrated Reconciliation Management Review A5
A4 Capacity Planning Base Capability
Initiative Assessment
4. DP
Performance Improvement ofAdditional Details / Assumptions
the performance management structure for demand management A5 Master Planning Base Capability 4.3 4 4
I
4 4 4 3.7 4 4 4 4 4
A1, A6, A15
Impact Factors 3.7 Management * The DP base capabilities
processes pilot
towill include one
enhance customer (AutoZone)
analytical and aand
capabilities selectuser
groupaccess
of products A4 A5 leveraging
Establish base MPS/MRP capabilities Master Planningtechnologies
advanced Base Capability
and utilizing Low Wave
High 1 Low High A4 Wave 2
A1
Benefits Categories 3.3 (Steering) M A7 A10
Customers

A2 A3 A5 A6 A13 A9 A12
Demand Management
Collaboration

A6 Cores Supply Forecasting A1: Demand


Benefits Impact 5. Network
2.5Planning* Piloted base capabilities
Design, development andstatistical
will address applying deployment methods ofand
a network planning
models, forecasting at capability which allows for A6 Cores Supply Forecasting 3.5 P4 4 4
Planning Base
4 4 1.3 1 1A3 1 1 1
A15
Benefits Timing 4
Enablement varying levels ofconcurrent
the hierarchy, and performing
planning
Product Innovation best
across fit
allforecast
Product nodes algorithms
in the
Lif ecycle supply network
Planning
Trade Promotions
Demand Forecasting A7 supply
Establish the capability to predict future Collaborative Material
of cores and Planning
integrate with capacity Low HighA2: Demand
Low High
A8 SCP

Demand Management
Capability A2
Dependency Value 5 * The pilot will be used to test the value of leveraging customer provided sales data (POS) Management A Transformation
A8 Vendor Managed Inventory Mgmt. Functional
2.3 6. Network Inventory Development
of the pilot is toand deployment of sustainable
for a futurenetwork inventory optimization processes
Collaboration
Suppliers

Complexity Factors * Another purpose leverage and apply learnings state solution A7 Collaborative Material Planning 3.6 C4 4 4 4 4 Integration
1.7 2 2 2 2 2 A13: ATP Order
Number of Functions 1 A9 PLM Supply Integration A4, A5, A6, A15
A3: Collaborative
Commitment
Optimization and applications
* Change management and training efforts are expected to be high due to current demand planning Integrate governance, processes, technologies and data between <Client> Supply Low High Low High
Forecasting
Project Duration 3 capabilities and skills Supply Management A1 A11 A12 A15 T A10: Inventory
A10 Inventory Deployment Excellence Deployment
Technology 7. Network3 Planning* Demand management
Rationalization of current roles & structure of capabilities
all forms of supply planning performed A8: Vendor
A7 functional integration will be addressed A6once base
Supply is established,
Network Planning A8 A16 A17
Supply Planning & Plant Scheduling A8 Vendor Managed Inventory 3.1 3 3 3 3 3 2.7 3 3 3 3 3 Excellence
Cost 4 Organizational deployedA13 above
stabilized thethesite
beyond
Inventory pilotlevel Planning
Deployment
A11 S&OP Process Redesign
Establish the capability for <Client> to manage product inventories at key customer's Low High Low High
A3, A5, A15 Managed
Inventory
A14 is viewed as an interim software solution to support DP base capabilities Planning
Rationalization * BarloWorld
* see criteria tab for assessment criteria detail Product Planning Service Product Planning Service Planning A12 Scenario-Based S&OP
A9 PLM Supply Integration A13 ATP Order Commitment
3.5 4 4 4 4 4 3.7A4:4Capacity
4 4 4 4 A7: Collaborative
A15
8. Value-Driven S&OPLogistics
S&OP process and governance improvement
Planning Supply Chain Execution Enhance collaboration between customers, PLM and SM to align product returns with Low High Planning
Low Base High Material Planning
A14 SCP Performance Management Capability A12: Scenario-
Based S&OP
A15 SCP Organizational Realignment
9. S&OP Analytics & Initiative Portfolio
Enhancement of current metrics, reports and analytical capabilities of the S&OP A9: PLM Supply A5: Master COMPLEXITY
Reporting Integration
A1 Planningprocess.

Supply Management
Effectiveness A7 Network Inventory Optimization A13 TPM Replenishment Planning Base
*Note: Size of bubble indicates relative cost.
Capability
*Note: Initiatives A14 and A15 are foundational, and therefore not illustrated on the matrix.
A2 DP Statistical Forecasting (Project Sky) A8 NP Organizational Rationalization A14 Collaborative Material Replenishment
2013 Ernst & Young LLP. All rights reserved.
A3 DP Systems Replacement A9 Value-Driven S&OP A15 Replenishment Performance Mgmt. Confidential and proprietary. New Initiative
A6: Cores Supply Revised Initiative Existing Initiative
Forecasting
A4 Collaborative Forecasting A10 S&OP Analytics & Reporting A16 Plant #1 Advanced Planning Pilot A11: S&OP
Process Redesign A14: SCP
A5 DP Performance Management A11 Replenishment Model (STAR) A17 Material Deployment Planning Performance
A15: SCP
Management
Organizational
A6 Network Planning Enablement A12 Replenishment Standardization Realignment

Sales & Operations Planning Supply Chain Planning


Foundation Base Capability Value Extension

Reference: EY copyrighted internal documents

21
Develop Roadmap Using the Prioritized and
Sequenced Initiatives
ILLUSTRATIVE

Roadmap should be developed with considerations to interdependent


projects and initiatives
Readiness of business and IS organizations through the roadmap phases
needs to be considered along with the benefits realization
22
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

23
Scenario 1: Improving S&OP Process Efficiency
and Effectiveness
Business Situation: Current Solution
Sales, finance & supply chain operating to different numbers. Need for cross- Landscape:
functional alignment & collaboration. SAP or non-SAP ERP
In efficient sales & operations planning process. Users spending large amount platform in place
of time collecting, formatting & preparing data for S&OP meetings. SAP APO or non-SAP
Inability to plan effectively for alternative business scenarios. supply chain planning
tools implemented &
Misalignment with financial objectives on a monthly basis with in effective
effectively utilized for
plans to bridge the gaps.
tactical demand &
Opportunities to optimize inventory placements & overall response to supply planning
changes in supply chain.
SAP BPC or non-SAP
Business & IS organization readiness to use cloud-based solution to financial planning &
enable the process. budgeting solution
Approach/Strategy: Central business
warehouse as data
Review & transform S&OP process with a view to bridge any process gaps.
repository for reporting
Implement IBP for S&OP, integrated with the existing transactional and tactical and source of historic
supply chain planning solutions for a centralized approach to S&OP. massaged data
Use HCI (HANA Cloud Integration) for direct integration of on-premise
solutions with S&OP on cloud.
Begin with sub-process or business unit pilot followed by rollouts for end-to-
end process & enterprise.

24
Scenario 1: Improving S&OP Process Efficiency
and Effectiveness (cont.)
To-be solution landscape:
IBP Platform
Master Data
SAP ECC

Historical Data S&OP


SAP BW

HANA Cloud Integration


Tactical Demand Plan
SAP APO DP S&OP Plan

Supply Plans
SAP APO SNP

Annual Financial Plans


SAP BPC
S&OP Volumes

Implementation Roadmap

Typically S&OP is implemented with a sub-process or BU pilot. After the pilot,


S&OP is rolled out across all the process area and business units.
IBP S&OP can be implemented with legacy ERP, APS, or financial planning
tools
25
Scenario 1: Improving S&OP Process Efficiency
and Effectiveness (cont.)
To-be solution landscape: IBP Platform
Master Data
SAP ECC

Historical Data S&OP


SAP BW

HANA Cloud Integration


Tactical Demand Plan
SAP APO DP S&OP Plan

Supply Plans
SAP APO SNP Control
Inventory
Tower

Annual Financial Plans


SAP BPC
S&OP Volumes

Implementation Roadmap

IBP platform could be further extended by implementing Control Tower for SC


analytics and Inventory for multi-stage inventory optimization capabilities
26
Scenario 2: Improving Short-Term Forecast
Accuracy
Business Situation: Current Solution
Sub-optimal deployment / replenishment decisions resulting in over-buffering Landscape:
or stock-outs. SAP ERP platform
Higher supply chain costs due to higher expedites in the short-term horizon. in place
Lower forecast accuracy leading to higher inventory targets. SAP APO implemented
& effectively utilized for
Deteriorating service levels.
tactical demand &
Multiple stock rebalancing and order movements. supply planning
Large number of manual short-term forecast adjustments. SAP BW as data
Approach/Strategy: repository for reporting
and source of historic
Establish clear business objectives based on pain points related to short-term data
forecasting.
Implement IBP for Demand (available post-Q1 2015) for demand sensing.
Use HCI (HANA Cloud Integration) for direct integration of on-premise
solutions with IBP.
Begin with pilot business unit as a proof of concept, followed by rollouts.
Enhance the benefits of the demand module by using it downstream to
optimize inventory placements using IBP for Inventory module. Implement IBP
for Inventory as the next phase.

27
Scenario 2: Improving Short-Term Forecast
Accuracy (cont.)
To-be solution landscape: IBP Platform

Master Data
SAP ECC

Short-term forecast

HANA Cloud Integration


Shipments, Orders, Demand
Data Warehouse / Inventory, POS
Demand Signal
Repository

Weekly Forecast
SAP APO DP

Adjusted Daily Forecast Inventory


SAP APO SNP

Pilot Rollouts Pilot Rollouts


Phase 1 Phase 2
Implementation Roadmap

Improve short-term forecast accuracy positively impacting deployment,


scheduling, and inventory decisions using IBP for Demand
Enhance inventory optimization using accurate short-term forecasts as input to
IBP for Inventory
28
Scenario 3: Optimize Inventory Across the
Supply Chain
Business Situation: Current Solution
Ineffective inventory management to respond to uncertain demand Landscape:
and supply. SAP ERP platform
Inventory placement challenges leading to deterioration in customer in place
service levels. SAP APO DP & SNP
Existing inventory planning & optimization approach does not consider total implemented &
view of supply chain (simultaneous planning of multiple buffers). effectively utilized for
tactical demand &
Inability to quantifiably bring inventory reduction opportunities and trade-offs
supply planning
for decision making.
SAP BW as data
Inability to model what-if scenarios for various inventory positions.
repository for reporting
Approach/Strategy: and source of historic
data
Establish clear business objectives based on pain points related to inventory
optimization.
Implement inventory optimization using IBP for Inventory.
Use HCI (HANA Cloud Integration) for direct integration of on-premise
solutions with IBP.
Begin with pilot business unit as a proof of concept, followed by rollouts.

29
Scenario 3: Optimize Inventory Across the
Supply Chain (cont.)
To-be solution landscape: IBP Platform

Master Data, Orders


SAP ECC

HANA Cloud Integration


Historical Data Inventory
Business Warehouse

Forecast
SAP APO DP

Inventory Targets
SAP APO SNP

Pilot Rollouts
Phase 1
Implementation Roadmap

Optimize inventory across the enterprise supply chain using


inventory optimization capabilities in IBP for Inventory
30
Scenario 4: Improve Tactical Planning and S&OP

Business Situation: Current Solution


In efficient tactical planning processes requiring manual efforts from users. Landscape:
Spreadsheets & legacy planning systems not adding value. ERP platform in place
Usability issues with existing solutions. Demand and supply
planning executed
Sales, finance & supply chain operating to different numbers. Need for cross-
using spreadsheets or
functional alignment & collaboration.
legacy systems
Business & IS organization readiness to use cloud-based solution to enable
the process.
Approach/Strategy:
Review & transform demand & supply planning processes. Identify
opportunities to improve sales & operations planning process in the
longer term.
Implement IBP for Demand & Supply followed by S&OP, integrated with the
existing transactional and business warehouse systems.
Use HCI (HANA Cloud Integration) for direct integration of on-premise
solutions with IBP on cloud.

31
Scenario 4: Improve Tactical Planning and S&OP
(cont.)
To-be solution landscape: IBP Platform

Master Data
SAP ECC
Forecast
Demand

HANA Cloud Integration


Shipments, Orders,
Supply Plan
Inventory, POS Supply Plan
S&OP

Data Warehouse

Supply &
Response

Annual Financial Plans

SAP BPC
S&OP Volumes
Pilot Rollouts Pilot Rollouts
Phase 1 Phase 2
Implementation Roadmap

Begin with IBP for Demand implementation. Implementation could be by divisions or big bang
depending upon influencing parameters like number of users, geographies, business units, etc.
Supply implementation is typically by product lines and plants. S&OP could be a pilot business unit
followed by complete enterprise 32
Scenario 5: Improve SC Performance and
Information Visibility
Business Situation: Current Solution
Multiple transactional and planning tools across the enterprise leading to lack Landscape:
of a single view of supply chain performance. Multiple transactional
Inadequate supplier visibility. systems and system of
records including SAP
Lack of visibility to supply chain disruptions like supply shortage or service-
ERP platform
level violations.
implemented
No end-to-end holistic view of the supply chain to support real-time
SAP APO or other
information and decision making.
planning tools
Latency in supply chain information availability leading to inventory buffers implemented
and delay in response or shipments.
Approach/Strategy:
Supply Chain Control Tower should be implemented as the first step reduce
the latency and support enhanced supply chain visibility.
Supply chain event response times could be further enhanced by combining
Control Tower with IBP for Supply & Response as the next step. This reduces
the time to resolve the problem.
Further S&OP processes produce a more valid & vetted plan using the Control
Tower-enabled visibility to supply chain data.

33
Scenario 5: Improve SC Performance and
Information Visibility (cont.)
ERP
IBP Platform

APS
Control

HANA Cloud Integration


Tower

Legacy Systems

Data Warehouses
S&OP

Suppliers

Customers Implementation Roadmap

Enable a single, holistic view of the business, supported by rich analytical


tools; individuals across various operations functions can come together to
collaboratively make decisions that benefit the enterprise as a whole 34
What Well Cover

Current planning challenges in the marketplace


The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up

35
Where to Find More Information

http://help.sap.com
Follow Cloud SAP Integrated Business Planning

https://solutionexplorer.sap.com
Browse Solutions/By Line of Business/Supply Chain /Demand-
Driven Business Planning/Sales, Inventory and Operations
Planning
Tim Payne, The Impact of In-Memory Computing on Supply Chain
Management (Gartner, October 2014).

36
7 Key Points to Take Home

SAP IBP is not a replacement for SAP APO at this point in time
Many components of SAP IBP can complement your existing
APO and ECC investments
Evaluate the fit of SAP IBP platform and components based on
current and future requirements and business and technology
alignment
Implementing SAP S&OP is a good way to start on the IBP
migration, if that aligns with recommended outcome of the
assessment
SAP is very quickly ramping up the functionality available in SAP
IBP, including functionality that is not available in SAP APO, like
demand sensing, inventory optimization, and response
management
37
7 Key Points to Take Home

SAPs vision is to have a single uniform data model so that data


movements are eliminated, thereby reducing data latency
To fully realize this vision will take some additional
developments from SAP
Start your IBP migration journey with a pilot; this will help you
acclimatize, with a lower risk, to the new IBP platform and
considerations that accompany a cloud solution
Moving to cloud platform will require a change in the way IS
organizations manage security, upgrades, landscape strategy,
support, and enhancements

38
Your Turn!

How to contact me:


Sachin Shetty
Sachin.Shetty@ey.com
@shettysaching

Please remember to complete your session evaluation


39
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