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What Well Cover
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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
Collaboration High operational costs, functions working in silos toward differing objectives
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Current Technologies Do not Address These
Planning Challenges
Advance
Planning &
Optimization
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
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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
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Planning System of Record Solution Capabilities
Scenario planning,
Poor services levels, less agility to respond
to sudden supply and demand variability
what-if simulation, Response
rapid re-planning
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What Well Cover
7
SAP Integrated Business Planning 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
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Integration Architecture
On Premise On Cloud
Tables or Standard
Extractors SAP IBP
SAP ECC
Flat File
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
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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
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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
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What Well Cover
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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
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SAP Supply Chain Planning Options (cont.)
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What Well Cover
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Business Requirements Assessment and Roadmap
Business Alignment
Process &
Functional
Alignment
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Assessment Alignment Framework
Dimension Definition
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Systematic Assessment of Supply Chain,
Current, and Future State Is Critical to Define
Technology Roadmap
Customer buying behavior Horizons and buckets
ILLUSTRATIVE
Time hierarchy
Variability/inventory strategy
Product and sale hierarchy
Inventory Optimization
Tax, SC Risk and Resiliency Considerations
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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
Capability
CapabilityGaps
Gaps:Material
Frequent changes are made to demand and supply plans
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
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
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
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Develop Roadmap Using the Prioritized and
Sequenced Initiatives
ILLUSTRATIVE
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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.
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Scenario 1: Improving S&OP Process Efficiency
and Effectiveness (cont.)
To-be solution landscape:
IBP Platform
Master Data
SAP ECC
Supply Plans
SAP APO SNP
Implementation Roadmap
Supply Plans
SAP APO SNP Control
Inventory
Tower
Implementation Roadmap
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Scenario 2: Improving Short-Term Forecast
Accuracy (cont.)
To-be solution landscape: IBP Platform
Master Data
SAP ECC
Short-term forecast
Weekly Forecast
SAP APO DP
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Scenario 3: Optimize Inventory Across the
Supply Chain (cont.)
To-be solution landscape: IBP Platform
Forecast
SAP APO DP
Inventory Targets
SAP APO SNP
Pilot Rollouts
Phase 1
Implementation Roadmap
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Scenario 4: Improve Tactical Planning and S&OP
(cont.)
To-be solution landscape: IBP Platform
Master Data
SAP ECC
Forecast
Demand
Data Warehouse
Supply &
Response
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.
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Scenario 5: Improve SC Performance and
Information Visibility (cont.)
ERP
IBP Platform
APS
Control
Legacy Systems
Data Warehouses
S&OP
Suppliers
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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).
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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
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7 Key Points to Take Home
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Your Turn!
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