Why to consider SAP IBP over APO?

Introduction of SAP APO and SAP IBP. Why to consider SAP IBP over APO?

In this article, we are going to see the introduction and the need to choose SAP IBP over SAP APO.

SAP APO Introduction

Advanced Planning and Optimization (APO) module is one of the key components under SAP Supply Chain Management (SCM)
Advanced Planning and Optimization consists of the following application functions −

  • Demand Planning
  • Supply Network Planning
  • Production Planning and Detailed Scheduling (PP/DS)
  • Supply Chain Collaboration
  • Global Availability
  • Transport Management
  • Supply Chain Collaboration/Inventory Collation Hub

    • SAP APO features
  • SAP APO − Demand planning, i.e. SCM-APO-FCS
  • SAP APO Supply Network planning, i.e. SCM-APO-SNP
  • SAP APO Production Planning and Detailed scheduling, i.e. SCM-APO-PPS
  • SAP APO Global Available-to-Promise, i.e. SCM-APO-ATP
  • Service Parts Planning, i.e. SCM-APO-SPP
  • Maintenance and Service Planning, SCM-APO-MSP
  • Integration of SAP APO and Supply Network Collaboration (SNC)
  • Integration of SAP APO and Supply Network Collaboration (SNC)
  • SAP APO Services related to Service Oriented Architecture (SOA)

SAP IBP Introduction

Fulfil future demand profitably with real-time supply chain management. Powered by in-memory computing technology within SAP HANA, this cloud-based solution combines capabilities for sales and operations, demand, response, and supply planning, and inventory optimization.
  • Cloud deployment
  • Real-time scenarios and simulation
  • Social collaboration
  • Powerful predictive analytics

Key Benefits:
  • Achieve a rapid deployment – Get up and running quickly with SAP Integrated Business Planning by using pre-configured process templates for accelerated implementation
  • Empower employees with intuitive features – Offer a unified, intuitive user experience with SAP Fiori and planning and simulation capabilities based on Microsoft Excel.
  • Plan resources effectively – Optimize resource efficiency by creating supply plans based on prioritized demands, allocations, and supply chain constraints.

SAP IBP Modules.



Sales and Operations Planning.

  • S&OP or sales and operations planning is an integrated business management process that drives organizational consensus to balance supply and demand.
  • The S&OP process, which typically happens monthly, aligns operational areas – such as sales, marketing, product development, manufacturing, procurement, finance, and accounting – so they work in concert to meet financial and organizational goals.
  • S&OP solutions integrate real-time data, including user behaviour and market-related information, which allows for supply and demand changes to be managed day-to-day.
  • SAP IBP S&OP balances supply and demand, and anticipate and respond to changing business conditions through simulation and scenario analysis.
  • Features
    1. Real-time planning
    2. Simulations and comparison of scenarios
    3. Monitor performance and future alignment
    4. Collaborate across departments.

Demand Planning

  • Demand Planning (DP) to create a forecast of market demand for your company's products. This component allows you to take into consideration the many different causal factors that affects demand.
  • SAP IBP demand planning includes several core capabilities such as
    1. Outlier detection
    2. Forecast alerts
    3. Powerful statistical algorithms
    4. Multiple forecast error measures
    5. Demand sensing
  • This set of tools provides the demand planner with the ability to develop an accurate mid-to-long term forecast.

Inventory optimization

  • Inventory optimization is the practice of having the right inventory to meet your demand, and buffer against unexpected disruption while avoiding wasteful surplus.
  • At its best, inventory optimization is an agile practice that not only responds quickly to risk and opportunity but also can predict and prepare for it.
  • Inventory optimization helps achieve
    1. Buffer against uncertainty in supply chain
    2. Balance inventory investment and service levels
    3. Optimize inventory across a multistage network
    4. Analyse inventory drivers
  • Planners on both the S&OP and inventory sides can look at multiple scenarios to arrive at a result that best meets customer service, revenue, and profitability objectives.
  • Demand-driven replenishment
    1. Position your inventory buffers strategically
    2. Calculate and refine replenishment buffer levels
    3. Generate replenishment orders and execute

    Supply and Response planning

    The response and supply planning process aims to increase visibility and streamline operations from one end of the supply chain to the other – from the raw materials supplier to the customer’s front door.

    1. Strategic supply planning – long-term: Long-term supply planning specialists work to integrate data from processes and subject specialists across the entire business – including forecasting, logistics, manufacturing, sales, marketing, and more
    2. Operational supply planning – mid-term: Mid-term planning is where strategy meets execution. At this stage, businesses must look at things like inventory plans, supply channels, and logistics capacity. At this point, strategies turn into orders and workflows, inventory gets positioned, and demand categories get prioritized.
    3. Response planning – short-term, customer-focused: Response planning reflects the fact that ultimately, the customer sets the demand – and it’s that demand that must be responded to, as immediately and accurately as possible.

    SAP IBP for response and supply covers the full range of processes viz.

    • Multilevel heuristics
    • Constraint-based supply optimization
    • Priority-driven response planning
    • Addresses all levels of tactical and operational supply planning
    • Mitigate risk with tactical rough-cut planning
    • Boost agility with operation response management
    • Create consistency with synchronized planning with S4/HANA

    Supply chain control tower

    • Companies are now also experiencing decreasing customer loyalty along with increasing pressure to deliver quality products, services, and customer experiences at competitive prices.
    • This confluence of circumstances makes it hyper-important that supply chain teams know what’s happening in their supply chain right now, why it’s happening, and how to address it quickly – before small disruptions become big expensive problems.
    • Supply chain control towers provide the visibility that is essential for organizations that need to navigate this complexity
    • Control tower enables
      • End-to-end visibility across the extended supply chain
      • Detect, Analyze and Act with intelligent exception management
      • Identifying issues quickly with customer alerts
      • Providing context and priority information

    Why choose SAP IBP?

    • There is no clear successor to SAP APO. Some of the functionality provided so far will be available in SAP S/4HANA while other elements will be moved to SAP IBP. On top of that, new functionality will be added. The chart below gives the overview.


    • If you have already implemented S/4HANA then must plan for SAP IBP as sooner or later, you need to move to SAP IBP.
    • SAP APO’s functionality GATP and PPDS are now available within S/4HANA EM. S/4HANA based AATP is matured compared to SAP APO or even competitor products.
      1. Product Availability Check (PAC)
      2. Back Order Processing (BOP)
      3. Product Allocations (PAL)
      4. Alternative Based Confirmations (ABC)
      5. Release for Delivery (RefDy)

    • SAP IBP does not contain applications for Available to Promise (ATP) or detailed Production Planning (PP/DS). So, options are:
      1. S/4HANA release 1610 onwards, PP/DS and Advanced ATP (AATP) is inbuilt in S/4HANA EM.
      2. With release 1909 AATP is more versatile and supports a different set of ATP scenarios compared to SAP APO GATP.
      3. Migration service from APO to S/4HANA PP/DS is available for customizing, mastering, and transactional data.
      4. Comparison between SAP IBP and SAP APO.


    Author

    Omkar Kalbhor
    SAP IBP Consultant, Baranwal Consultancy and Services (BCS), Pune, Maharashtra, India

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