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,
Lingaiah