SAP IBP ImplemenTATION

We carry out IBP implementations in the sense of iterative process prototyping, in which the customer's business processes are modeled on a development system and adapted step by step to the specific requirements of the company in close coordination with management and key users.

Through repetitive cycles of customizing, testing and approval, your company's business processes are modeled in the software and further detailed until finally an optimized and integrated solution is created that on the one hand meets your company's specific processes and on the other hand leaves the standard of the SAP software largely untouched.

In our IBP-ERP blog, you can learn what an integrated SCM planning process with SAP ECC or S/4 HANA can look like. As a result, it consists of four functional building blocks that lead to the result in a certain sequence.

At this point, we will show how this process can be realized, i.e. implemented, with an existing SAP ERP and using the previously selected IBP components.

A practical proposal for the phases of the implementation is made below and an approximate time frame is presented. For the individual phases, it is then also possible to estimate how they can be integrated into a possible SAP S/4 HANA implementation if S/4 HANA has not yet been used.

In addition, each company can make preparations without software implementation, which in themselves can improve strategic and operational planning.

All measures listed here as examples can be carried out in parallel by different teams, in many cases the data quality is already assured and in the best case the phase can be left out altogether. 

Revision of planning master data (potential time frame 3 – 6 months)

Material master data in the area of planning must always be up-to-date. So far, so trivial and yet the situation in many SAP ERP systems can be significantly improved:

• This applies to the common parameters expressed specifically for SAP in the material master views MRP1 to MRP 4.
• SAP S/4 HANA requires the use of MRP areas and planning versions. These can be prepared at any time in the ERP system SAP ECC.
• Scheduling parameters in the work center and routing are pure master data and can be checked and improved at any time.
• Product segmentation according to ABC, XYZ (as provided in IBP) and possibly other parameters such as size or weight can also be performed at any time.

Analytics and logistics controlling (potential time frame 3 – 6 months)

As mentioned several times, the analytics in the well-known modules SD, MM and PP is changing and improving due to the introduction of SAP S/4 HANA and a new functionality. Or the possible intermediate step of porting SAP ECC to the HANA database already offers significant advantages due to the improved speed. Every company can and should define a core collection of necessary reports (queries), KPI and alerts in the modules mentioned above. Completely independent of the software, this transparency almost always means an operational improvement.

Product segmentation based on planning methods (potential timeframe 3 – 6 months)

It was frequently pointed out that the right products or assemblies or planned BOMs should be planned. This is particularly helpful for complex BOM structures. And the results can almost always already be used in the ERP system by assigning a suitable planning strategy. 

As a small hint based on several projects, this sequence can be helpful.

1. Performing a cluster analysis for all finished products and assemblies, as far as possible from the point of view of BOM similarity
   Result, all finished products and assemblies are assigned to a cluster. A cluster can and often will consist of only one product.
2. Performing the ABC and XYZ analysis for all finished products and assemblies of the first BOM level.
   Result, all A products that are simultaneously X products can be considered suitable for forecast-based planning.
   Result, all B and C products / assemblies that are in a cluster (for example, variants of a configurable material) can be assigned to a planning material. A planning material can also be a 'dummy' material with a planned BOM, but not held in stock.
3. Performing the ABC and XYZ analysis for all raw and packaging materials.
   Result, all raw materials and packaging materials that are A or B and X or Y products can be considered suitable for forecast-based planning.
4. Analysis, whether raw materials and packaging materials, the A or B and X or Y products are not simplified as KANBAN or VMI (Vendor Managed Inventory) in ERP can be controlled.
5. Compilation of all potentially forecast-based, planning-relevant products, whether finished product, assembly, raw material or packaging.
6. Decision on how to plan finished products and assemblies that are not suitable for forecasting:
   • Target stock 0, customer is supplied directly by a vendor with a suitable planned delivery time, if this path is possible.
   • Target stock 0, customer is delivered after calculated replenishment lead time.
   • Target stock 1 or 2 for rarely sold products.
7. The result is a list of all products to be planned in a system like SAP IBP with suitable parameters and master data in the ERP system.
8. What remains to be determined is the share of sales of products not to be included in the IBP. For the sake of completeness, this 'gap' must be planned in sales planning and in integrated financial planning for a complete scope in order to at least estimate the effects on profit, capacity utilization, transport costs, etc.

Education and training

Knowledge about disposition processes and forecast models has nothing to do with a specific ERP or planning system. REFA and other institutions offer such courses. The period before an implementation project is just right to refresh or acquire new knowledge. Or a regular internal workshop with selected topics around planning is scheduled.   

Development of a Best Practices based demo system (possible period one month)

• An SAP Best Practices based system (both S/4 HANA and IBP with complete data as in the SAP Model Company) can be deployed within a month and used for demos, initial training and even fit/gap analysis

Alternatively, conduct a feasibility study (proof of concept) with the customer's own data and processes (possible time frame 1.5 - 2 months)

The core processes are modeled with a reduced scope of data. This can be done on the basis of the standard planning area delivered by SAP (Unified Planning Area) or by completely rebuilding all structures. The latter is recommended primarily for IBP for Demand projects, while for implementations in the area of Supply Planning, the standard data model should be used as a basis in order to minimize the risk of incorrect implementation and thus ultimately save time.

In both approaches to building a demo system, key users should be involved early on and basic training for them should be considered:

• Setting up and building an IBP sample planning area and some users
• Basic training of about one week to get used to the FIORI based user interface and the basic EXCEL operations of the planning tables

Subsequently, a specification or directly a blueprint consisting of at least two components can be created (possible time frame one month + x depending on the scope)

• Definition of high level processes, planning objects and scope (IBP for Demand, IBP for Sales and Operations, IBP for Inventory) 
• Definition of the data interface CPI-DS or SDI between ERP and IBP

If the decision for an implementation project has already been made after a proof of concept or the best practice analysis, it is recommended to overlap the blueprint with a prototyping phase with several iterations of configuration and approval in order to obtain a solution design that is as detailed as possible and oriented towards reality.

Without going into too much detail, each of the three core components of IBP Planning, Network Planning and Inventory Optimization can be implemented in about three months. Of course, this period depends on the number of planning objects and rollout phases. 

But, it remains to be said, a few hundred products in a few manufacturing plants and distribution warehouses can be sensibly processed to a go-live in a maximum of six months.

Note: If the introduction of PP-DS is considered useful, the following dependency must be taken into account: PP-DS is itself directly linked to the MRP run. As a result, PP-DS can be implemented either before or after IBP for Demand. This implementation takes at least 3 - 6 months and is traditionally demanding. Since the same experts will be involved, it is recommended that IBP for Demand and PP-DS are not implemented in parallel.

Furthermore, when introducing PP-DS, you should generally wait a certain amount of time before starting the long-term network planning in IBP for Sales and Operations.

The three phases shown here each take about 2 - 4 months to complete, depending on the intensity of project implementation, although phase 3 cannot be seriously estimated here, depending on complexity.  In the best case, IBP can be used with one module after six months.

In any case, it should be shown that even if SAP S/4 HANA is implemented over a period of several years, the relative shortness of the individual phases means that each one can be implemented in a meaningful way and shows positive results even before integrated SCM planning overall is achieved.