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