Lower stock, better service levels, working more efficiently and making choices based on the correct and always available data. It almost sounds too good to be true. Or is it closer than everyone thinks? All this succeeds or falls with proper planning and therefore a smoothly running S&OP process (Sales & Operations Planning). Almost everyone sees the benefit of a smoothly running S&OP process, you can even make money with it. but the implementation often proves to be a difficult task. S&OP is sometimes wrongly regarded as the implementation of a software solution and thus as providing information within a company and between the different departments and stakeholders. S&OP is actually only the first step in a growth path towards supply chain integration and thus integrated business planning. SAP's "new" planning platform called SAP IBP (Integrated Business Planning) helps and makes possible to achieve these goals.
IBP is much more than just a technical solution, it is about achieving processes and chain integration and making the right choices based on reliable information. It provides the tools to go through a structured process every month which covers the different departments and functions. A process driven by people and leadership instead of driven by supply chain or sales.
The Gartner model measures the maturity of S&OP using 5 stages. The maximum achievable is stage 5, where companies conduct their business operations based on profitability and maximum customer satisfaction. If companies want to grow up to stage 3 and beyond, using the right technology is a must and even a requirement.
The diagram below shows the stages where IBP plays an important role and its translation to the goal and mindset according to Gartner. Only a few companies can achieve stage 5 at the moment, for example companies like Apple or Coca-Cola, because they are advanced enough in their S&OP processes. The first step will always be to reach stage 3, which translates into a properly functioning S&OP process where demand and supply are aligned. Subsequently, there will be an iterative path to grow towards a fully demand driven supply chain with a focus on the customer and achieving maximum profitability and minimizing costs.
Ultimately, logistics is of course human work: it is about making the right decisions and interacting between different departments and interests. SAP IBP basically provides the structure that will serve to optimize the process. It is not the solution to all problems, however it does help identify them quickly and make the right decisions. Just take the “What-if” functionality of IBP as an example: it can quickly calculate and save the result of different scenarios and by combining those volumes with financial data, the right choice can be quickly made in each meeting based on validated data and the comparison of possible scenarios.
With our approach and vision, based on the current maturity and complexity of the supply chain, we will set a feasible goal and achieve this iteratively and as a team. We also want to make objectives measurable and monitor them during and after the implementation of IBP. In this way we can provide insight into the added value of the project and make it clear prior to a project where the 'Return of Investment' lies for IBP. We even have a solution to implement IBP in one month.
All this and much more is part of our Intelligent Planning concept. Also curious about where your company currently stands according to the Gartner concept and you want to know where the added value of SAP IBP lies for your company? Please contact us and we will meet you to hear your story. Looking for more? Check out the IBP for inventory business case.
Think SAP Integrated Business Planning, Think McCoy.