This SAP blog post explains how to leverage Integrated Business Planning (IBP) solution in managing through the demand and supply disruptions. Read the full article to learn more.
The spread of the new coronavirus, COVID-19, is being felt globally across organizations in ways that are difficult to assess. The affected regions are at the heart of many global supply chains. Key information is lacking, and organizations fear they won’t be able to meet customer demand. In near term, the cost of supplies may increase by expedited freight costs, paying premiums to buy up supply and holding capacity. Organizations need to work through alternative sourcing strategies. It is critical to identify alternative supply scenarios and evaluate what it means for business.
SAP’s Integrated Business Planning (IBP) solution can help organizations manage disruptions and arrive at cost-effective ways to run their supply chain.
1. Visibility to Inventory and Capacity
In today’s economic scenario, many organizations have their manufacturing plants and subcontractors located in China which, as of today, has been affected the most by the COVID-19 crisis. In uncertain times, the first thing supply chain analysts would like to get is real-time visibility to their inventory situation and manufacturing capacity so that they can balance available supply against the demand disruption. Supply chain analysts inside your organization can perform following steps to get hold of current challenges within their supply chain.
Planners can view where inventory is located in their network, and have it displayed with important KPIs to gain an overview of the situation.
They can examine what the drivers of the inventory targets are with the help of easy and powerful dashboarding.
Additionally, they can build scenarios to find if it makes sense to shift to a more expensive supplier with shorter lead time.
2. Managing Short-term Fluctuation in Demand
In an unexpected situation, SAP IBP Demand sensing will first leverage internal demand signals to sense short term demand. These will include, your consensus demand forecast and other internal signals, like sales, shipments, and future/open orders. Secondly, Demand Sensing is also able to consider various external demand signals such as retailer POS data, customer store inventories, weather data, market research data and so on.
By analyzing and learning from various demand signals, Demand Sensing optimizes the granular short-term sensed forecast. This granular and optimized visibility helps drive between deployment, inventory, allocation, transportation, and execution decisions.
Within a short-term horizon, based on the new sensed demand, planners can create an allocation plan based upon all new modeled constraints. This allocation plan can be passed to the ATP solution of choice, where it’s used during the live online ordering process, acting as a constraint for SO commit dates and quantities.
3. Manage your Supply Constraint and Find Alternate Sources
It is critical for planners to find what they can produce, or source based on available capacity and alternate source in alignment with a change in demand. With SAP Integrated Business Planning (IBP), planners can create a comprehensive supply plan for their entire supply chain network and evaluate subnetworks impacting certain sets of locations and products.
- Review a planning view to give you visibility across your current supply plan and capacity constraints.
- Modify your capacity and/or change your sourcing/manufacturing ratio.
- Share your supply plan forecast with your supplier through Ariba.
- Re-create a supply plan using a planning algorithm based on a new supply scenario.
4. Execute Profitable Scenario Planning
Additionally, planners can simulate various scenarios on the fly and come up with cost-effective answers to update their management. SAP’s Integrated Business Planning scenario and simulation capability helps planners to simulate various scenarios, compare them side by side and present it to management to select the most cost-effective and/or appropriate plan.
Planners then adjust and finalize the supply plan.
Whether you are a retailer who is seeing a slowdown of inventory in a store or a manufacturer trying to figure out where the inventory is located and how to move inventory to a different location(s), or a distributor trying to find a new mode of transport to distribute your goods, SAP’s Integrated Business Planning provides you maximum flexibility and at the same time allows you to create supply chain plans, and react to changing market dynamics like today. SAP’s IBP solution works on a single data model, which means your demand signals at the retailer are connected to your supply at the factory even if they are miles apart. SAP’s Integrated Business Planning solution enables companies to tackle uncertainty in demand and supply and it will help organizations to overcome COVID-19 challenges which has caused a major disruption in supply chain.
