Unlock the Potential of Characteristics-Based Planning (CBP) in SAP IBP

[PravinDeshmukh]

The much awaited and sought after Characteristics Based Planning Functionality in the SAP Integrated Business Planning Product was recently introduced with the SAP IBP 2408 release. This blog will provide an overview of what this brings on the table for customers in Supply Chain Planning, key use cases and key considerations with general guidance to start unlocking the value out of this, and what’s instore in the near future.

Overview

Characteristics-Based Planning (CBP) in SAP Integrated Business Planning (IBP) elevates the current Supply Planning capabilities in SAP IBP with an approach to proactively steer supply by considering various attributes(characteristics) of products, demands, and supplies. This functionality empowers planners to harmonize supply plans based on various types of Characteristics.

In the initial release, CBP is only offered as an early adopter program on selective basis.

Why should businesses look at CBP?

The introduction of CBP can be driven by several factors. If any of the below points ring a bell, then you need to explore Characteristics based Planning with SAP IBP.

• Product Diversity: You handle many different products that are quite like each other but with variations like different sizes, colours, strength, etc.
• Consumer Expectations: Your Customers across different continents expect products that are tailored to their personal and regional needs.
• Compliance Adherence: There is a clear need to navigate changing geopolitical situations and regulatory norms & incorporate compliance regulations/ supplier certifications that change based on different countries and political situations. You need to ensure that your products meet all necessary legal requirements -> Reduce risk of non-compliance.
• Supply Chain Risk: You need to lower the costs of making different versions of products and supply the right variant mix to the right demand locations based on specific rules

Let’s look at a couple of use cases that highlight the main idea.

Example 1:

Scenario: A global fashion brand needs to ensure that specific clothing items meet various region/Country-specific needs and consumer preferences.

Using CBP, the brand can infuse product characteristics(attributes) like size, colour, style while making demand and supply plans and create supply matching rules to proactively select the matching supplies if available or create new purchase plans that adhere to the rules. One could also think of introducing non-product characteristics (logical attributes) to drive supply decisions – for example: Demand Regions and Country of Origin à certain Demand regions can only source from specific set of Countries. Other examples of logical attributes could be – mode of delivery (certain demands need to be fulfilled with a specific mode of transport or a with a specific Production version). Choosing the required Transportation Lane and Production Data Structure (PDS) based on various combinations of demand characteristics is a key function that CBP offers.

 Example 2:

Scenario: A pharmaceutical company must comply with strict regulations for drug production and distribution across different countries.

CBP allows the company to infuse characteristics(attributes) such as Potency, packaging/labeling requirements, qualification/certification (regulatory adherence) to drive supplies. This ensures that drugs are produced and shipped in compliance with local regulations, reducing the risk of regulatory issues and ensuring patient safety. Here again, choosing the right Production version (Production Data Structure in SAP IBP) based on various combinations of demand attributes is a key function for such use cases. Demand attributes in this case could be the Demand Region or country and supply attribute could be the country of origin.

Now let’s look at some technical building blocks that are newly introduced to support this in SAP IBP

CBP Attributes: Define characteristics / attributes relevant to demand and supply elements (Product or Logical attributes like size, color, etc..). A new attribute type.

CBP Attribute Sets: A logical Grouping of CBP attributes. One could think of these as Product Groups / brands/ Divisions. For example: Product Group – Clothing could be one attribute set. All products belonging to this group would then share the same attributes. Hence while making decisions, one has to consider if the same set of attributes can apply to all products in the set or not? The advantage of having this flexibility is that one could then create different set of rules for different attribute sets. General guidance is not to create an attribute set per product but rather at higher levels of the product.

In the Attribute Set, you have a choice to mark then as either demand relevant or Supply Relevant or Both. With this you can ensure that these attributes can be infused on the demands (Forecasts or Sales Orders) and the supply attributes can be written on the supply output elements like Planned orders, STRs, PRs. Here you can also influence which attributes can influence the selection of Sources of Supply ( PDS / T-lanes)

CBP Rules Framework (CBP Profile): Houses rules for steering supply decisions based on CBP attributes. A new app to maintain rules with CBP attributes.

Various operators are made available with the first release and more will be made available in subsequent releases. (Refer restrictions note for details)

Here some nuances to keep in mind while building the rules:

• It matters whether a CBP attribute is Demand relevant and/or supply relevant and how it is used in the rules.
• The Rules framework is designed to work in similar way to the Planning run profile. Both are needed to run a Finite Heuristic Supply Planning run with CBP
• The starting point is always with a Segment – for example a Demand Region
• Within the Segment, you can define:
  • Demand Selection criteria (combination of attribute values) – example: Demand Region=EU; Quality=B
  • Supply Matching criteria – For the Demand selection combination defined above – example: Demand Region=EU; Quality is any.
  • Supply Creation Rule for new supply: This is optional if you always wan to derive the Supply attributes values written on the planning output (planned orders) to be the same as the Demand attribute values – and it only works if all attributes in the attribute set are Demand and Supply Relevant)
  • If you have “Supply only” attributes in the attribute set, and you have used it in the supply matching condition, then you must define in the supply creation rule the value for it to be written on the planned orders. For example, country of origin is a supply only attribute, and Demand Region EU can only take supply from VN, then in the Supply Creation Rule you must specify the value as VN.
  • For demands that are added to a segment but not matched with any supply, 1:1 matching is applied by default.
  • Any attribute that you do not specify in any segment, would be assigned to the catch all segment in supply creation and will always be considered last.

For more details refer: SAP help link: Working with Rule Segments

Data Integration:

CBP is supported by Real Time Integration. Out of the box, an end-to-end process is supported for S4HANA backend with Demand and Supply Segmentation.

Link: Demand and Supply Segmentation in S4HANA

For set up details Refer Prerequisites and Preparatory steps needed for Real time Integration

Options are available for use cases without S4HANA Segmentation. For this RTI Business Add Inns are available and some project work is expected to enable the end-to-end process. More so on the ERP side as well to find the right placeholders for the attributes and their values on various ERP transactional documents.

Order APIs with characteristics are also planned on the future roadmap to support various uses cases including non SAP ERP execution systems.

Following objects can be integrated with RTI to support CBP process:

• Mapping of ERP characteristics to IBP characteristics. This supports the back and forth conversion of characteristics / values across ERP and IBP. The mapping is created with an active integration model for classes/characteristics. Prerequisite being that a class is available in ECC/S4HANA with the characteristics need for planning. This class can be solely created for planning purpose in IBP with a separate organization area.
• Assignment of Products to attribute sets. (CBP attributes and sets are freely maintainable directly in SAP IBP)
• All transaction data objects like sales orders, POs, STOs and stock with batches (these work out of the box if S4HANA segmentation is used. Otherwise, with BADIs, they need to be enhanced to append characteristic values on the way to IBP to be reflected as CBP attributes on these orders in SAP IBP.
• Planning data (output of the Finite Heuristic algorithm – STRs, PRs, Planned Orders.. ) – work the same way as described in the point above but in opposite direction (IBP à ECC/S4HANA)

One of the key tasks for Customers and Consultants would be to assess the Prerequisites and the current restrictions to evaluate the case for CBP in SAP IBP.

Prerequisites:

• SAP IBP Response and Supply – order-based planning (OBP). The algorithm supported is finite heuristics for matching demand and supply according to defined rules.
• Planning area based on SAP 7F (Flexible Model) and supported by Real Time Integration (RTI)
• Application Mapping instead of Business Meaning/OBP Settings
• Batches with characteristics for Stock on hand

Current Restrictions:

The 2408 release comes with certain restrictions that would definitely need to be considered while exploring the use of CBP. However, these restrictions will slowly be lifted in the subsequent releases. If certain restrictions are showstoppers for you then please follow the usual path to raise influence requests.

Link: CBP restrictions Note

What’s in store for the future

The current release lays down a strong foundation to further build upon. This is just a starting point for this very complex and exhaustive topic. Hence CBP is a multi-release topic, more so to cover uses cases for different industries. Most of the make-to stock businesses can potentially directly benefit. Although in SAP IBP, there may be an opportunity with CBP to accommodate and plan MTO business, but this is currently not supported out of the box mainly because an end to end process cannot be supported with back integration to ERP. But there is certainly great potential and strong interest here.

Some key topics for the future are:

Propagation of characteristic values down the bill of material. This has potential to support use cases from various industries – especially process industries like Life Sciences / Chemicals.

Demand Prioritization with CBP attributes. (Currently a workaround with SFC attributes is technically feasible)

Priorities for CBP rules to support use cases like multi option rules

*the above is not an exhaustive list – please refer to SAP IBP Roadmap for all the details and to stay up to date with the latest.

Link: Roadmap

Stay tuned for more!