SAP IBP latest flavour – why bother

IBP is SAP latest offering regarding Supply Chain planning. In essence, it covers Demand Planning (forecasting) S&OP, order-based planning (network planning) inventory optimization and a fancy cockpit all operating within SAP managed cloud environment.

Generally, IBP value proposition is to provide functionality that ERP or SAP 4/HANNA lack the ability to effectively manage within the supply chain.

Why bother?

·        If you already have invested million in SAP-APO system which could include DP, gATP, SNP and PPDS then IBP migration only worthwhile if IBP provides real business benefits.

•       IBP Demand solution provides a better forecast accuracy: in many cases forecast accuracy is also influenced by how the demand planning solution is constructed rather than complex  forecasting algorithms
•          With respect to PP/DS, IBP does not support the production planning functionality, IBP does not support advanced availability check

·       IBP provides Demand planning, S&OP  and network planning (time series and order based planning) Order based planning includes optimizer and deployment.

Greenfield project where a customer does not have SAP APO investing in IBP is worthwhile if there are business needs to manage:

1. Forecasting
2. S&OP
3. Network planning (where the is network complexity that traditional MRP cannot manage)

Ideally, a customer should also consider SAP 4/HANNA to effectively manage integration with IBP which is managed via the SAP 4/HANNA add-on. This makes sense if you plan to use time series or order-based planning.

Moving to IBP from an existing SAP ERP and APO must carefully consider the eventual upgrade of SAP  to SAP 4/HANNA. Migrating to IBP will result in a high cost of ownership if there will be concurrent usage of both IBP and SAP APO until all APO functionality is switched off.

The benefit of moving to SAP 4/HANNA allows a more sensible migration to IBP. It Can avoid  concurrent systems and ideally a two-phased approach can be used:

PHASE 1:

This implies firstly migrating ERP to SAP 4/HANNA and then activating additional functionality.

• Taking care of production: move from APO PP/PPDS to SAP 4/HANNA PP/DS . Practically PP/DS resolves the problems with poor MRP planning plus if network optimization is not needed then PP/DS can practically manage the whole supply chain
• Taking care of availability check: move from APO gATP to SAP 4/HANNA Advanced ATP although missing functionality such as rule based ATP and CTP.

PHASE 2:

In this phase it possible to switch from APO to IBP to avoid concurrent usage specifically within the area of demand management and Supply Network planning (SNP) . Careful consideration and validation is needed with respect to SNP functionality specifically in the areas:

• CTM although order-based planning does offer some similar functionality
• SNP optimizer: verify order-based planning optimizer to determine value considering the complexity 

SAP EWM The Good , the Bad and the Ugly

The good, the bad and the ugly, one of the greatest westerns ever made considering that it was a so-called ‘spaghetti western’

How does this apply to SAP EWM ?

The Good

SAP realized shortcoming within the existing SAP Warehouse Management system ability to satisfy complex business needs for warehouse operations. Many customers resorted to best of breed products integrated with SAP requiring complex interfaces. Initially, EWM was released with Service Parts Execution and subsequently evolved to its own product known as Extended Warehouse Management. Started with release 5.0 and currently reached 9.5 (Jan 2019) . SAP EWM solution capability eventually matured to easily compete with best of breed solution in most cases more effective due to the tight integration with SAP ERP system. EWM basically can support a complex high volume warehouse that requires an efficient operating solution to satisfy business needs.

Subsequent with the migration to SAP 4/HANNA SAP offer embedded EWM solution reducing the need of having a separate server with installed SAP SCM system to operate EWM system.  Many multinational organizations might continue to operate EWM on a separate decentralized server system due to transactional volumes and performance needs.

The Bad (or rather the difficult):

Achieving warehousing operational efficiency requires top-notch skill set not only within SAP space but also warehousing processes and integrating technology. Warehouse technology may consist of extremely complex automated systems such as Swisslog autostore , to automated crane systems and coveyor systems. Then we have Radio frequency , bar-code labels , packaging ect… Complex make up of technological elements integrated within SAP processes.

Swisslog autostore

In order to achieve operational excellence in terms of efficiency and effectiveness some form of bespoke custom development is required. Most project implementation require bespoke developments increasing risk and costs. Right skill set fundamental for efficient implementation and off-shoring rarely provides good outcomes.

The Ugly:

With the migration to SAP 4/HANNA embedded EWM system, EWM is now also offered which consists of basic EWM and advanced EWM.

Advanced EWM is only available at additional extra licensing costs and the following is not available within basic EWM license

• Material Flow System (MFS)
• Wave Management
• Transportation Units/YARD mgt
• Labour mgt
• Value added service
• Warehouse Billing
• Kitting
• Dock appointment scheduling
• Slotting

Wave mgt and Transportation units are fundamental in 90% of warehousing operations and having basic EWM license the installed EWM system will fail to provide real operational business benefits and leverage operational efficacy. This shortcoming can be overcome by means of bespoke enhancement: using shipment instead of TU and using PPF for scheduling and automating picking in place of waves.

The lack of MFS in the basic EWM license is less of an issue in that many operations, the automated system PLC driven hardware normally controlled by operating system provided by hardware supplier. Most cases, the hardware suppliers usually support the system and guarantee a certain percentage uptime . The service level agreement then becomes an issue with utilizing EWM MFS, most prefer interfaces to the existing PLC operating system. Basic EWM has full ability to generate IDOC to interface hardware.

With respect to kitting, not many warehouse systems carry-out kitting therefore not a major impact. Where it is needed, simple workaround is to simply set-up IM triggered movements: 1 for receipt of kit header and 1 for issue of kit components mapped to respective delivery documents. Simple low cost effort, a custom programme can be done to trigger kitting in order to keep reference between incoming header and outgoing components, the same custom can either require manual insert of components or read a BoM of the header to derive components.

Additional information with respect to SAP 4/HANNA: not only there is EWM embedded but also the availability of advanced production (technically APO PPDS embedded) and Advanced Available to Promise  (partially old APO gATP) but lacking CTP and rule-based availability check. They all require separate license implying that to work efficiently basic SAP 4/HANNA will not be sufficient to work smart