What are the core components of SAP IBP?

SAP IBP for S&OP

SAP IBP for S&OP is often the first component that companies implement. This approach makes sense since companies almost always start out with long and midterm sales planning that then needs to synchronize with operations -- production, procurement, logistics -- planning.

The ability to use different forecasting models, coupled with the ability to simulate various demand, supply and financial models, provides a holistic view of the entire supply chain network, including customers, suppliers, manufacturing and distribution units. To ensure a quick and steep learning and adoption curve, this IBP component uses an all-familiar Microsoft Excel interface.

SAP IBP for Demand

The ability to predict demand of products is one of the critical success factors in the entire planning process, and rightly so, as it impacts the entire upstream planning of procurement, production and inventory. Even the best forecasting tools can only predict demand to a certain degree of accuracy, and the key to better demand planning lies in a collaborative and consensus approach to predicting demand and working backward to ensure timely supply.

However, with this IBP component, the possibility to adopt a demand-driven approach to material planning becomes a reality for short to medium term, when verifiable demand signals, such as confirmed sales orders, help supply chain planners to quickly adapt the supply.

SAP IBP for Response and Supply Planning

Like the IBP for demand component, this IBP component also takes advantage of demand-driven materials planning to account for demand variability or supply disruptions that cannot be planned for in advance.

SAP IBP for Inventory enables complete modeling of the inventory network.

Starting with rough-cut capacity planning, the IBP for Response and Supply Planning component simulates and evaluates different planning scenarios to strike a balance among demand, supply and capacity constraints, while taking into account the procurement, production, inventory and warehousing costs. The output from this IBP component forms the basis for input into the IBP S&OP component.

Response planning takes into account the demand variability and how best to allocate constrained supplies to meet the highest service level and fill rate, while keeping costs to a minimum.

SAP IBP for Inventory

SAP IBP for Inventory enables complete modeling of the inventory network; that is, from raw material supplier to the end customer, and all the logical supply chain links involved between them. This IBP component uses advanced algorithms to balance inventory investment with service level at each supply chain link to come up with optimum inventory and service levels for each product and physical location combination.

For example, in a multisourcing environment, this IBP component factors in transportation costs, replenishment lead times, targeted service level and fill rate to suggest where and how much of a product's inventory should be available at a specific location.

SAP Supply Chain Control Tower

This IBP component is a dashboard and analytics tool to provide real-time, end-to-end visibility of the entire supply chain of the company. Apart from the ability to set up user-defined alerts when there's a potential disruption to the supply chain, this component of the cloud-based supply chain management software IBP also has the ability to drill down to the lowest level to evaluate the root cause leading to supply chain issues or disruptions.

Further, this IBP component can also integrate with different SAP logistics and supply chain components, such as SAP Enterprise Central Component (commonly known as ECC), SAP Extended Warehouse Management and SAP Transportation Management, as well as non-SAP systems.