One of the surprising lessons we learned from the COVID-19 pandemic on supply chains were the importance of toilet paper in human life, and with it, the vulnerability of global supply chains. In this article, you will learn more about how SAP IBP can help you address the challenges from COVID-19 in your supply chain.
In response of the COVID-19 pandemic governments have implemented a range of measures such as social distancing, movement restrictions (ground and air freight), curfews, partial and complete border closures, among others, to contain the spread of the virus. The result of these measures are for example restrictions in market/delivery routes, changes in consumer behaviour and buying patterns and shortage of employees and capacity which impact the supply chain.
These disruptions have impacted a wide range of organizations, even if it is not directly the organization itself it can be via tier 1 (direct) or tier 2 (secondary) suppliers. Due to supply-chain restrictions and disruptions globally supply chain professionals have found it difficult to meet all their targets without delays. Supply chain resilience is critical to addressing the vulnerability of global supply chains within economic uncertainties and deal with disruptions in the supply chain. To increase the supply chain resilience and mitigate the impact on business activities from COVID-19, players in the logistics, transport and supply chain industries must deploy innovative measures in all the areas of supply chain management, such as demand, operations, inventory and supply. All in addition to engaging in strategic partnerships with players and intermediaries across the supply chain. Such an innovative measure must ensure higher efficiency rates, lower inventory levels with better delivery performance and service, reduced production costs and an overall improvement in the financial performance of a company.
How can you deploy innovative measures, increase the supply chain resilience and mitigate the impact on your business activities? SAP Integrated Business Planning (SAP IBP) and McCoy can support you in this!
SAP IBP to deal with the impact of COVID-19 on your supply chain
New supply chain technologies, such as SAP IBP, are critical to maintaining effective supply chains. SAP IBP enables organizations to rapidly respond to challenges such as the COVID-19 pandemic. The trend of technological innovations continues to more resilient digital supply chain models as businesses focus on expanding or transforming capabilities to increase flexibility, visibility and control. All to enable greater responsiveness to continuous disruption, demand changes and uncertainty which we are experiencing in the COVID-19 pandemic. In addition, having visibility across the entire end-to-end supply chain is key. Technological innovations have the potential to solve the lack of visibility in a supply chain, right from the supply of raw materials (how and where they come from) to the manufacturers and the end-users (consumer). SAP IBP support you dealing with these topics! In other words, SAP IBP helps businesses to ensure aligning supply chain planning in real-time from sales and operations planning (S&OP), forecasting and demand, response and supply and inventory planning consisting of multiple supply chain applications.
These supply chain applications includes solutions focused around sales and operations, demand, inventory, response and supply and the Supply Chain Control Tower giving you great end to end visibility. SAP IBP helps you to execute simulations on changes in demand, operations, inventory and supply and evaluate scenario’s. In addition to this, the entire SAP IBP platform is cloud-based.
Sales operations management
Would you like to improve the alignment between your demand and supply? The SAP IBP for sales and operations application aligns your demand and supply. It also integrates financial and operational planning in combination with high level strategic planning and mid-to-long term operational plans. The alignment of sales and operations plans corporates strategy and goals to drive revenue growth, increase market share, and attain financial targets.
With the possibilities to plan scenario’s you can conduct what-if analysis in your sales and operations plan to find alternatives and reduce impacts of COVID-19 related disruptions and/or demand changes to logistics, manufacturing or sourcing. You can rapidly deploy what-if scenario models to increase or reduce demand, address supply locations and transportation downtime impact. And help implement quick what-if scenario development capability and build assets to resilient the supply chain.
Response and Supply
One of the importance of SAP IBP is a planning tool that has the ability to model relevant supply chain variables to generate a feasible plan, but also provide tight integration with execution aspects and re-planning capabilities so that plans can be adjusted as they become reality. This aspect is extremely important in today's volatile environment with COVID-19 where reality as imagined when plans were made could look very different from what it is when they became reality. With response and supply you can quickly adapt to changes in demand in an constrained or unconstrained mode. This module of SAP IBP improves the ability to support tactical (mid-term) and operational (short-term) supply planning with a single solution.
Response and supply planning involves taking into account uncertainty by adjusting plans to take consider uncertainties. Imagine a situation such as machine breakdowns resulting in lower than expected output or sales orders that are different from forecasted demands. SAP IBP's response planning capabilities offers features that enable a profitable response in the face of volatility. Modelling the rules for allocation of demand in in a constrained situation is an important part of the response and supply module. It also includes the feature of order confirmations that helps improve the delivery reliability by considering allocations and generate order promises against customer orders. IBP provides an integration with S/4 HANA with which, among other things, planning-relevant orders (purchase requisitions, purchase orders, deliveries, planned orders, production orders and sales orders) can be integrated.
Is it important for your business to know where demand is going to be and when? In terms of meeting demand, it’s important that organizations are ready and not taken by surprise. Normally this is already a challenge, but in circumstances like a COVID-19 pandemic this becomes even more difficult. While it is important to understand and predict where the demand is, it is also important to understand and predict on how and where to allocate resources. You need to make sure you have the right products in the right place and at the right time. You want to prevent a situation where products sitting around in a warehouse with no demand in that area while you need to deal with stock outs in other areas and not be able to full fill customer demand. The cost of disruption not only have negative impact on future revenues, but also on the loyalty of customers if you fail to deliver a product to the market in order to satisfy demand.
With demand management you can deal with uncertainties in demand by demand sensing in the short term considering COVID-19 related variables. Analyse and predict potential shift of demand to different distribution channels and product mixes. Predict the COVID-19 related demand shifts using advanced forecasting models. And help enabling machine learning model forecasting solutions.
With the management of your inventory you can coordinate inventory targets using multi-echelon inventory optimization. It represents the state of the art approach for inventory optimization across the end to end supply chain. Multi-echelon inventory optimization looks at inventory levels holistically across the supply chain while taking into account the impact of inventories at any given level or echelon on other echelons. This means that uncertainties like imperfect forecasts, demand variability and the risks of late deliveries can be absorbed using the least amount of inventory. This results in coordinated planning, smoother operations, better profit, and more satisfied customers. In addition you can define inventory policies locations and targets, re-plan current allocations, assess inventory buffers and asses push-pull triggers.
By being able to quickly adjust your supply plan or your inventory levels you can deal with new uncertainties as a result of new developments in the COVID-19 pandemic.
End to end visibility
Can you imagine how end to end visibility will improve the performance of your supply chain? With the end to end visibility, which is realised by the Supply Chain Control Tower, you can monitor KPIs for tracking supply resolutions via dashboards and alerts. It also helps you enabling real-time visibility to inventory situation, manufacturing, logistics, supplier capacity and technology enablement.
You have on the fly information available which could have a huge impact on the efficiency of your supply chain. For adapting to the changes and taking resolute and timely decisions requires great visibility which is directly available. Also it provides real-time reporting on things such as forecast variance, production capacity and material shortages. The real-time visibility to both supply and demand enables you to perform scenario planning and implement inventory optimization strategies. Beside this the Supply Chain Control Tower gives you innovative possibilities to collaborate internally but also with external parties such as suppliers.
To collaborate with external parties (e.g. suppliers, logistics service providers and other 3rd party organizations) to provide key services to add value to the supply chain, organizations have looked to improve customer service and satisfaction. This enhanced collaboration requires solutions for improved collaboration and visibility. An extended collaboration across the manufacturing plant, various departments and third-party providers can lead businesses to take fast and resolute decisions, achieve better process transparency and enable higher customer satisfaction. With these challenges, the Supply Chain Control Tower can help you to fully respond to this.
Would you like to learn how SAP IBP can improve your supply chain performance?
McCoy can help you with the implementation of SAP IBP. We have experience with all the applications of SAP IBP and have a team of consultants dealing with all the aspects of Integrated Business Planning. We have experience with leveraging ready-to-use solutions and making process adjustments matching your exact business requirements. As a local player we are close to our customers and can think along with them. We carry out full-cycle implementation processes.
More than IT is our slogan! This is reflected in our Planning as a Service concept where we create a common ground between IT and business. We not only create added value for your organization in the implementation of SAP IBP, we also help in your supply chain as a supply chain partner. We work with you to optimize your KPIs and improve your supply chain performance.
Would you like to learn how SAP IBP can improve your supply chain performance? Feel free to contact Thomas Hendrickx, firstname.lastname@example.org or +31 (0)6 27 32 86 42