SCM2015 Shetty Sapapoversussapintegrated

SAP APO Versus SAP Integrated
Business Planning: Leading Advice

and Key Considerations for
Whether and How to Migrate to
SAPs New Cloud-Based Supply
Chain Planning Suite
Sachin Shetty
EY
Produced by Wellesley Information Services,
LLC, publisher of SAPinsider. 2015 Wellesley
Information Services. All rights reserved.
In This Session
Understand the new planning modules from SAP within the

context of real-world planning challenges
Hear the technology options available in the marketplace,
including features, functionality, and integration scenarios
Compare on-premise vs. cloud planning options
Understand applicable scenarios and transition path for moving to
IBP solution landscape
Get guidance on how to start assessing your specific situation
and ascertain the direction in which to go
1
What Well Cover
Current planning challenges in the marketplace

The new SAP product roadmap for planning
SAP supply chain planning options and functionality
Assessment and direction setting for creating roadmap
Use cases for implementation scenarios
Wrap-up
2
Current Planning Challenges in the Marketplace
Organizations are facing new challenges and opportunities related to globalization and
volatility
Volatility has increased dramatically, with constantly shifting supply lines and
unpredictable demand
Businesses want to monitor changes in their supply chain and the potential
risks/opportunities they create, and they want to know impact and possible actions in
real time
Business Capabilities Business Issues
Response Poor services levels, less agility to respond to sudden supply and demand variability
Analysis Inability to measure and improve performance
Collaboration High operational costs, functions working in silos toward differing objectives
Decisions Inability to make rapid business decisions supported by real-time data
Efficiency Long planning cycle times, ineffective planning process
3
Current Technologies Do not Address These
Planning Challenges
Advance
Planning &
Optimization
Supply Chain Supply Chain

Event Visibility &
Management Analytics
Supply Chain
Execution
Significant investments in planning solutions and capabilities have not generated the
desired outcomes and the expected benefits
Supply chain technologies have always been developed with separate functional focus
and suffer lack of synchronization
Users have not been able to combine the power of analytics with planning
Event management has helped to understand the supply chain events but has not
transcended into re-planning to respond
Supply chain execution and planning have remained disparate, locally
optimized processes
4
Planning System of Record A New Paradigm
Plan
Simulate Optimize
Supply Chain Planning
System of Record
Respond Measure
Monitor
Planning solutions have to be recast considering the current market challenges and
leveraging technologies like cloud, in-memory, and mobile
Supply chain Planning System of Record will have to consider the convergence of
planning and execution capabilities to facilitate demand-driven, responsive, and agile
planning
Along with planning and optimization, analytics, granular data visibility, and ability to
respond appropriately to unplanned events needs to be an integral part of SCP System
of Record
5
Planning System of Record Solution Capabilities
Business Issues Solution Capability Business Capability
Scenario planning,
Poor services levels, less agility to respond
to sudden supply and demand variability
what-if simulation, Response
rapid re-planning
Inability to measure and improve KPI, analytics, reports,

performance optimization
Analysis
High operational costs, functions working in Information visibility,

silos toward differing objectives collaboration
Collaboration
Harmonized data model,

Inability to make rapid business decisions Analysis,
updated global supply
supported by real-time data Decisions
chain and financial data
Long planning cycle times, ineffective Simple user interface,

planning process remote accessibility Efficiency
6
What Well Cover

Wrap-up
7
SAP Integrated Business Planning Platform
Excel UI Web UI Fiori Apps

Supply Chain Monitoring
Supply Chain Control Tower
Integrated Business Planning (IBP)
IBP for Sales and Operations Planning
IBP for Inventory IBP for Demand
IBP for Response & Supply
SAP Cloud HANA Platform
IBP 5.0 is the latest version of the integrated business planning platform
IBP for Response yet to be released
All the components have common HANA platform and are available on cloud
Harmonized data model; components interoperate seamlessly
Users interact with the applications using Excel, Web, and Fiori-based interface
Excel is a Microsoft registered trademark. 8
SAP Integrated Business Planning Platform (cont.)
End-to-end visibility of supply chain data
Real-time integration with SAP data sources
Control Tower Detailed order-level information
Configurable analytics & alerts and case management
Demand, supply chain, and financial model at aggregate and detailed levels
Sales & Operations
Scalable scenarios and simulation
Planning Collaboration for transparent communication and record decisions
Statistical forecasting & statistical analysis of demand data

Demand Demand sensing and mid- to long-term forecasting
Automated, exception-based planning process
Efficiently position inventory to respond to uncertain demand & supply

Inventory Multi-stage inventory optimization
Inventory target recommendations
Generation of operational supply plan at order level

Rules-based, priority-driven solution for supply planning, allocations planning, and order rescheduling
Supply
Pegging and root cause analysis for seeking bottlenecks
& Response Rapid what-if analysis
Generate and provide allocations to ATP and reschedule sales orders
9
Integration Architecture
On Premise On Cloud
Tables or Standard
Extractors SAP IBP
SAP ECC
Flat File
HANA Cloud Integration

Standard
Extractors
SAP APO
Flat File HCI Agent Staging Tables Core Tables
BW
DSO
HCI can connect to any standard database or flat file data source directly
HCI updates data directly in SAP IBP tables
HCI provides export API, which could be invoked to write data back to on-premise
10
The Underlying Technology
IBP platform is based on HANA in-memory database
Gartner defines in-memory computing (IMC) as architecture where applications
assume all the data required for processing is located in the main memory of
their computing environments
Gartner has identified three styles of IMC applications:
Native IMC: The application is developed from inception on the basis of IMC
design principles
Retrofitted for IMC: Applications that were originally designed on traditional
technologies but are now re-platformed on top of an in-memory data
Hybrid IMC: Applications use IMC design principles and technologies only in
part, usually to store and process the most performance- or scalability-
sensitive application data, or to support real-time analytics
SAP IBP is a native IMC application. It has been developed specifically to
leverage the HANA database and hence provides the most benefit among the
different overlapping SAP SCP applications
11
IBP Enabled with HANA Addresses the New
Planning Paradigm
Plan for global and complex supply chains by improving the
speed at which the applications process complex data sets
Improved response times that help planners iterate through
multiple scenarios and models in real time
Allows planners to work collaboratively and interactively without
taking hours to complete the process
Leverage analytics for accurate planning and better insights
Work with granular data in supporting increased agility and rapid
decision making
12
What Well Cover

Wrap-up
13
SAP Supply Chain Planning Options
SAP APO provides a solid on-premise planning option while SAP IBP provides
a new-generation cloud-based planning option
Table below depicts at a high level the planning options for given processes/
functionalities (includes upcoming IBP 6.0 functionality)
These are key functionalities only; supporting capabilities differ between the
cloud and on-premise options
Process/Functionality Cloud (SAP IBP) On premise (APO/other)

Statistical forecasting, consensus demand planning IBP Demand APO Demand Planning (DP)
Demand sensing, short-term forecasting IBP Demand Enterprise Demand Sensing
(EDS SmartOps)
Aggregate supply planning IBP Supply & Response APO Supply Network Planning
(SNP)
Capable to match, demand-supply prioritization IBP Supply & Response APO CTM (capable to match)
Deployment planning None (planned for future) APO SNP
14
SAP Supply Chain Planning Options (cont.)
Process/Functionality Cloud (SAP IBP) On Premise (APO/other)

Rapid re-planning based on demand, supply or IBP - Supply & Response APO GATP + CTM + BOP
capacity changes; update supply proposal & orders
Unconstrained heuristics IBP S&OP, Inventory, APO SNP
Supply
Constrained heuristics IBP S&OP, Supply & APO SNP
Response
Supply planning optimizer IBP Supply & Response APO SNP
Sales & operations planning IBP for Sales and APO, BI
Operations Planning
Rules-based order promising, capable to promise None APO GATP
Inventory planning & optimization IBP Inventory (only FG Enterprise Inventory & Service
currently; BOM/RM to be level Optimization
added in future) (EIS - SmartOps)
SC metrics, actionable analytics, alerts, dashboards, Control Tower + IBP Supply Chain Info Center,
analytics-assisted response Response SAP Supply Chain Performance
Management, SAP Event
Management
15
What Well Cover

Wrap-up
16
Business Requirements Assessment and Roadmap
Organizations need to do a detailed assessment of their process and functional

requirements in the short, mid, and long term while developing their roadmap
for supply chain planning transformation
Several other factors like IS processes, technology/architecture, and business
alignment also need to be considered
Business Alignment
Process &
Functional
Alignment
IS Organization & Process Technology & Architecture

Alignment Alignment
17
Assessment Alignment Framework
Dimension Definition
Vision Vision states concepts, values and goals that might be

known and understood by entire organization.
Strategy Establishes how to achieve the proposed vision

through objectives and actions.
KPIs Defines and communicates strategic and process

indicators that might be implemented sot that the
targeted value generation, as well as directing
processes and people to the established vision.
Process Determines scope and defines future state operating
models and flows.
Technology Defines and implements tools to be used to support

the future state processes.
Organization Formalizes and disseminates, through the company,

roles and responsibilities of involved stakeholders.
People Skills and behaviors development, required for future

state implementation and successful transformation.
18
Systematic Assessment of Supply Chain,
Current, and Future State Is Critical to Define
Technology Roadmap
Customer buying behavior Horizons and buckets
ILLUSTRATIVE
Frequency planning layers

Right planning paradigm
Strategic trade offs
Time hierarchy
Variability/inventory strategy
Product and sale hierarchy
Agendas and dynamics

Supply chain archetype
Reference: EY copyrighted internal documents

19
Leverage Leading Practice for Supply Chain
Planning Implementations
Integrated Business Planning (monthly) Strategic SC Planning
(monthly, quarterly)
Product Mgmt Demand Business
Supply Review
Review Review Review
Network Strategy
Integrated Reconciliation, Financial Analysis and Integration
Inventory Optimization
Tax, SC Risk and Resiliency Considerations
Demand & Supply Planning (weekly, daily)

Supplier Demand Supply Customer
Collaboration Management Planning Collaboration
Scheduling and Order Promising (daily)

Order Allocation &
Detailed Scheduling
Promising
20
Assessment Outcomes Need to Be Converted to
Initiatives as Well as Prioritized and Sequenced
ILLUSTRATIVE
1. Process & Technology Assessment 2. Capability Gaps & Readiness
Capability
CapabilityGaps
Gaps:Integrated
North America
Supply Chain
Implications
Capability
CapabilityGaps
Gaps:Demand
Frequent changes are made to demand and supply plans
reacting vs. planning Latin America

Source
Inconsistent processes focused on
thru Pay
Management within standard lead times, -stabilizing
forcing focus on short
de
-term horizons
production and
Cross-functional causal factors are Implications

not fully understood or
Multiple demand plans incorporated to determine supply requirements
Capability
CapabilityGaps
Gaps:Material
reacting vs. planning EMEA Management

Supply
thru Inventory within standard lead times, -stabilizing
de
Not all pertinent constraints are fully considered to determine
forcing focus on short -term horizons
production and
No clearly defined supply policy supply requirements
Cross-functional causal factors are Implications not fully understood or
Multiple demand plans incorporated
Wrong products to determine
are produced supply requirements
and purchased, resulting in
Capability
CapabilityGaps
Gaps:S&OP
Low forecast accuracy
reacting vs. planning Asiathru
Plan
Pacific
Cash
inventory write offs or lost sales
within standard lead times, -stabilizing de
Not all pertinent constraints are fully considered to determine
forcing focus on short -term horizons
production and
No clearly defined supply policy Functional supply requirements
areas work towards individual objectives instead
Goal and accountability misalignment Cross-functional
of driving towards optimizing total cost causal factorstrade
vs. service are Implications
-offs not fully understood or
Multiple demand plans across the Wrong incorporated
products
entire supply to determine
are produced
chain supply requirements
and purchased, resulting in
Low forecast accuracy Inconsistent processes focused on inventory write offs or lost sales
Demand requirements and/or within constraints
supply standard lead times, -stabilizing
de production and
Limited collaborative planning reacting vs. planning Not all pertinent constraints are are not
fullyfully
considered to determine
No clearly defined supply policy understoodFunctional
or incorporated forcing focus on short -term horizons
supply requirements
Goal and accountability misalignment of driving towards Cross-functional
optimizing causal
totalability
cost vs. factorstrade
service are not fully understood or
-offs
Lack of advanced planning capabilities limit to optimize
Non -enterprise applications Multiple demand plans across
total cost vs. Wrong
the trade
service entire
-offssupply
incorporated
products
acrosschaintheare entire
to determine
produced
supplyandchain
supply requirements
purchased, resulting in
Low forecast accuracy inventory write offs or lost sales
Demand requirements Notand/or supply constraints
all pertinent constraints are are not
fullyfully
considered to determine
Limited collaborative planning understoodFunctional
or incorporated
No clearly defined supply policy supply requirements
Goal and accountability misalignment of driving
Lack of advanced towards
planning optimizinglimit
capabilities totalability
cost vs. service trade
to optimize -offs
Non -enterprise applications across
total cost vs. service Wrong
the trade
entire products
-offssupply
acrosschaintheare produced
entire supplyand purchased, resulting in
chain
Low forecast accuracy inventory write offs or lost sales
Demand requirements and/or supply constraints are not fully
Limited collaborative planning understoodFunctional
or incorporatedareas work towards individual objectives instead
Goal and accountability misalignment of driving
Lack of advanced towards
planning optimizinglimit
capabilities totalability
cost vs. service trade
to optimize-offs
Non -enterprise applications across
total cost vs. the trade
service entire
-offssupply
acrosschain
the entire supply chain
Demand requirements and/or supply constraints are not fully
Limited collaborative planning understood or incorporated
Lack of advanced planning capabilities limit ability to optimize

Non -enterprise applications total cost vs. service trade
-offs across the entire supply chain
3. Initiatives Development
4. Prioritization and Sequencing
A1 Demand Planning Base Capability
Initiative Establish base capabilities in product demand forecasting leveraging advanced
Process Area Demand Planning
Overview technologies and utilizing appropriate planning parameters and data structures
Initiative Performance Impact Enablement Complexity Dependency
Issues / Challenges Initiative Outputs / Outcomes Benefits Categories
* Inability to apply statistical forecast methods and models to * Implemented demand forecasting system A1 Demand Planning Base Capability 3.7 4 4 4 4 4 2.3 2 2 2 2 2
Revenue Enhancement X 1 A15
generate a projection of product demand * Standardized processes and parameters Establish base capabilities in product demand forecasting leveraging advanced Low High Low High
Initiative
* Inability to effectively forecast product demand at varying Description
* User training (process and tools)
OpEx (manufacturing) X 1
levels of the demand hierarchy * Master data definition and refinement (if needed) A2 Demand Management Functional Integration 2.9 3 3 3 3 3 3.3 3 3 3 3 3
1. Site Planning
* Inability to differentiate baseline forecasting approach on
Standardize and align planning
* Data structure definition and refinement (if needed)
& scheduling processes, organizational structure and A1, A15
Standardization technology usage across all site OpEx (logistics)
planning entities X 1 Fully integrate governance, processes, technologies and data across all core demand Low High Low High
the basis of product demand characteristics * Detailed roles and responsibilities
* Inability to determine and apply forecast algorithm(s) best * Standard solution-provided performance measurementIntegrated
and # Initiative
2. DP Systems
suited for individual product demand characteristics
Evaluation, configuration and deployment
reporting capabilities
ofFinancial Planningtool
a demand forecasting
OpEx (procurement) 0 to replace the A3 Collaborative Forecasting 3.2 3 3 3 3 3 1.7 2 2 2 2 2
A1, A2, A15
Replacement existingmanagement
un-supported Integrate governance, processes, technologies and data between <Client> Demand Low High Low High
* Advanced performance detaileddemand planning
Sales
requirements &tool
Operations Planning0 A1 Demand Planning Base Capability
OpEx (SC planning)
(metrics, analytics, reporting and visualization) A2
A4 Capacity Planning Base Capability Demand Management Functional Integration 3.8 4 4 4 4 4 3.3 3 3 3 3 3
3. Collaborative Development of a process in which client collaborates with strategic customers in key A1, A5, A6, A15
* Impact assessment of POS data usage (pilot only) Integrated Business Planning A9 A10 Establish base capabilities in constraint-based capacity planning leveraging advanced Low High Low High A11
Forecasting markets in order to improve forecast accuracy Working Capital Efficiency X 1 A3 Collaborative Forecasting
Product Review Demand Review Supply Review Integrated Reconciliation Management Review A5
A4 Capacity Planning Base Capability
Initiative Assessment
4. DP
Performance Improvement ofAdditional Details / Assumptions
the performance management structure for demand management A5 Master Planning Base Capability 4.3 4 4
I
4 4 4 3.7 4 4 4 4 4
A1, A6, A15
Impact Factors 3.7 Management * The DP base capabilities
processes pilot
towill include one
enhance customer (AutoZone)
analytical and aand
capabilities selectuser
groupaccess
of products A4 A5 leveraging
Establish base MPS/MRP capabilities Master Planningtechnologies
advanced Base Capability
and utilizing Low Wave
High 1 Low High A4 Wave 2
A1
Benefits Categories 3.3 (Steering) M A7 A10
Customers
A2 A3 A5 A6 A13 A9 A12
Demand Management
Collaboration
A6 Cores Supply Forecasting A1: Demand

Benefits Impact 5. Network
2.5Planning* Piloted base capabilities
Design, development andstatistical
will address applying deployment methods ofand
a network planning
models, forecasting at capability which allows for A6 Cores Supply Forecasting 3.5 P4 4 4
Planning Base
4 4 1.3 1 1A3 1 1 1
A15
Benefits Timing 4
Enablement varying levels ofconcurrent
the hierarchy, and performing
planning
Product Innovation best
across fit
allforecast
Product nodes algorithms
in the
Lif ecycle supply network
Planning
Trade Promotions
Demand Forecasting A7 supply
Establish the capability to predict future Collaborative Material
of cores and Planning
integrate with capacity Low HighA2: Demand
Low High
A8 SCP
Demand Management
Capability A2
Dependency Value 5 * The pilot will be used to test the value of leveraging customer provided sales data (POS) Management A Transformation
A8 Vendor Managed Inventory Mgmt. Functional
2.3 6. Network Inventory Development
of the pilot is toand deployment of sustainable
for a futurenetwork inventory optimization processes
Collaboration
Suppliers
Complexity Factors * Another purpose leverage and apply learnings state solution A7 Collaborative Material Planning 3.6 C4 4 4 4 4 Integration
1.7 2 2 2 2 2 A13: ATP Order
Number of Functions 1 A9 PLM Supply Integration A4, A5, A6, A15
A3: Collaborative
Commitment
Optimization and applications
* Change management and training efforts are expected to be high due to current demand planning Integrate governance, processes, technologies and data between <Client> Supply Low High Low High
Forecasting
Project Duration 3 capabilities and skills Supply Management A1 A11 A12 A15 T A10: Inventory
A10 Inventory Deployment Excellence Deployment
Technology 7. Network3 Planning* Demand management
Rationalization of current roles & structure of capabilities
all forms of supply planning performed A8: Vendor
A7 functional integration will be addressed A6once base
Supply is established,
Network Planning A8 A16 A17
Supply Planning & Plant Scheduling A8 Vendor Managed Inventory 3.1 3 3 3 3 3 2.7 3 3 3 3 3 Excellence
Cost 4 Organizational deployedA13 above
stabilized thethesite
beyond
Inventory pilotlevel Planning
Deployment
A11 S&OP Process Redesign
Establish the capability for <Client> to manage product inventories at key customer's Low High Low High
A3, A5, A15 Managed
Inventory
A14 is viewed as an interim software solution to support DP base capabilities Planning
Rationalization * BarloWorld
* see criteria tab for assessment criteria detail Product Planning Service Product Planning Service Planning A12 Scenario-Based S&OP
A9 PLM Supply Integration A13 ATP Order Commitment
3.5 4 4 4 4 4 3.7A4:4Capacity
4 4 4 4 A7: Collaborative
A15
8. Value-Driven S&OPLogistics
S&OP process and governance improvement
Planning Supply Chain Execution Enhance collaboration between customers, PLM and SM to align product returns with Low High Planning
Low Base High Material Planning
A14 SCP Performance Management Capability A12: Scenario-
Based S&OP
A15 SCP Organizational Realignment
9. S&OP Analytics & Initiative Portfolio
Enhancement of current metrics, reports and analytical capabilities of the S&OP A9: PLM Supply A5: Master COMPLEXITY
Reporting Integration
A1 Planningprocess.
Supply Management
Effectiveness A7 Network Inventory Optimization A13 TPM Replenishment Planning Base
*Note: Size of bubble indicates relative cost.
Capability
*Note: Initiatives A14 and A15 are foundational, and therefore not illustrated on the matrix.
A2 DP Statistical Forecasting (Project Sky) A8 NP Organizational Rationalization A14 Collaborative Material Replenishment
2013 Ernst & Young LLP. All rights reserved.
A3 DP Systems Replacement A9 Value-Driven S&OP A15 Replenishment Performance Mgmt. Confidential and proprietary. New Initiative
A6: Cores Supply Revised Initiative Existing Initiative
Forecasting
A4 Collaborative Forecasting A10 S&OP Analytics & Reporting A16 Plant #1 Advanced Planning Pilot A11: S&OP
Process Redesign A14: SCP
A5 DP Performance Management A11 Replenishment Model (STAR) A17 Material Deployment Planning Performance
A15: SCP
Management
Organizational
A6 Network Planning Enablement A12 Replenishment Standardization Realignment
Sales & Operations Planning Supply Chain Planning

Foundation Base Capability Value Extension
21
Develop Roadmap Using the Prioritized and
Sequenced Initiatives
ILLUSTRATIVE
Roadmap should be developed with considerations to interdependent

projects and initiatives
Readiness of business and IS organizations through the roadmap phases
needs to be considered along with the benefits realization
22
What Well Cover

Wrap-up
23
Scenario 1: Improving S&OP Process Efficiency
and Effectiveness
Business Situation: Current Solution
Sales, finance & supply chain operating to different numbers. Need for cross- Landscape:
functional alignment & collaboration. SAP or non-SAP ERP
In efficient sales & operations planning process. Users spending large amount platform in place
of time collecting, formatting & preparing data for S&OP meetings. SAP APO or non-SAP
Inability to plan effectively for alternative business scenarios. supply chain planning
tools implemented &
Misalignment with financial objectives on a monthly basis with in effective
effectively utilized for
plans to bridge the gaps.
tactical demand &
Opportunities to optimize inventory placements & overall response to supply planning
changes in supply chain.
SAP BPC or non-SAP
Business & IS organization readiness to use cloud-based solution to financial planning &
enable the process. budgeting solution
Approach/Strategy: Central business
warehouse as data
Review & transform S&OP process with a view to bridge any process gaps.
repository for reporting
Implement IBP for S&OP, integrated with the existing transactional and tactical and source of historic
supply chain planning solutions for a centralized approach to S&OP. massaged data
Use HCI (HANA Cloud Integration) for direct integration of on-premise
solutions with S&OP on cloud.
Begin with sub-process or business unit pilot followed by rollouts for end-to-
end process & enterprise.
24
and Effectiveness (cont.)
To-be solution landscape:
IBP Platform
Master Data
SAP ECC
Historical Data S&OP

SAP BW

Tactical Demand Plan
SAP APO DP S&OP Plan
Supply Plans
SAP APO SNP
Annual Financial Plans

SAP BPC
S&OP Volumes
Implementation Roadmap
Typically S&OP is implemented with a sub-process or BU pilot. After the pilot,

S&OP is rolled out across all the process area and business units.
IBP S&OP can be implemented with legacy ERP, APS, or financial planning
tools
25
and Effectiveness (cont.)
To-be solution landscape: IBP Platform
Master Data
SAP ECC
Historical Data S&OP

SAP BW

Tactical Demand Plan
SAP APO DP S&OP Plan
Supply Plans
SAP APO SNP Control
Inventory
Tower

SAP BPC
S&OP Volumes
IBP platform could be further extended by implementing Control Tower for SC

analytics and Inventory for multi-stage inventory optimization capabilities
26
Scenario 2: Improving Short-Term Forecast
Accuracy
Sub-optimal deployment / replenishment decisions resulting in over-buffering Landscape:
or stock-outs. SAP ERP platform
Higher supply chain costs due to higher expedites in the short-term horizon. in place
Lower forecast accuracy leading to higher inventory targets. SAP APO implemented
& effectively utilized for
Deteriorating service levels.
tactical demand &
Multiple stock rebalancing and order movements. supply planning
Large number of manual short-term forecast adjustments. SAP BW as data
Approach/Strategy: repository for reporting
and source of historic
Establish clear business objectives based on pain points related to short-term data
forecasting.
Implement IBP for Demand (available post-Q1 2015) for demand sensing.
solutions with IBP.
Begin with pilot business unit as a proof of concept, followed by rollouts.
Enhance the benefits of the demand module by using it downstream to
optimize inventory placements using IBP for Inventory module. Implement IBP
for Inventory as the next phase.
27
Scenario 2: Improving Short-Term Forecast
Accuracy (cont.)
Master Data
SAP ECC
Short-term forecast

Shipments, Orders, Demand
Data Warehouse / Inventory, POS
Demand Signal
Repository
Weekly Forecast
SAP APO DP
Adjusted Daily Forecast Inventory

SAP APO SNP
Pilot Rollouts Pilot Rollouts

Phase 1 Phase 2
Improve short-term forecast accuracy positively impacting deployment,

scheduling, and inventory decisions using IBP for Demand
Enhance inventory optimization using accurate short-term forecasts as input to
IBP for Inventory
28
Scenario 3: Optimize Inventory Across the
Supply Chain
Ineffective inventory management to respond to uncertain demand Landscape:
and supply. SAP ERP platform
Inventory placement challenges leading to deterioration in customer in place
service levels. SAP APO DP & SNP
Existing inventory planning & optimization approach does not consider total implemented &
view of supply chain (simultaneous planning of multiple buffers). effectively utilized for
tactical demand &
Inability to quantifiably bring inventory reduction opportunities and trade-offs
supply planning
for decision making.
SAP BW as data
Inability to model what-if scenarios for various inventory positions.
repository for reporting
Approach/Strategy: and source of historic
data
Establish clear business objectives based on pain points related to inventory
optimization.
Implement inventory optimization using IBP for Inventory.
solutions with IBP.
Begin with pilot business unit as a proof of concept, followed by rollouts.
29
Scenario 3: Optimize Inventory Across the
Supply Chain (cont.)
Master Data, Orders

SAP ECC

Historical Data Inventory
Business Warehouse
Forecast
SAP APO DP
Inventory Targets
SAP APO SNP
Pilot Rollouts
Phase 1
Optimize inventory across the enterprise supply chain using

inventory optimization capabilities in IBP for Inventory
30
Scenario 4: Improve Tactical Planning and S&OP

In efficient tactical planning processes requiring manual efforts from users. Landscape:
Spreadsheets & legacy planning systems not adding value. ERP platform in place
Usability issues with existing solutions. Demand and supply
planning executed
Sales, finance & supply chain operating to different numbers. Need for cross-
using spreadsheets or
functional alignment & collaboration.
legacy systems
Business & IS organization readiness to use cloud-based solution to enable
the process.
Approach/Strategy:
Review & transform demand & supply planning processes. Identify
opportunities to improve sales & operations planning process in the
longer term.
Implement IBP for Demand & Supply followed by S&OP, integrated with the
existing transactional and business warehouse systems.
solutions with IBP on cloud.
31
Scenario 4: Improve Tactical Planning and S&OP
(cont.)
Master Data
SAP ECC
Forecast
Demand

Shipments, Orders,
Supply Plan
Inventory, POS Supply Plan
S&OP
Data Warehouse
Supply &
Response
SAP BPC
S&OP Volumes
Pilot Rollouts Pilot Rollouts
Phase 1 Phase 2
Begin with IBP for Demand implementation. Implementation could be by divisions or big bang
depending upon influencing parameters like number of users, geographies, business units, etc.
Supply implementation is typically by product lines and plants. S&OP could be a pilot business unit
followed by complete enterprise 32
Scenario 5: Improve SC Performance and
Information Visibility
Multiple transactional and planning tools across the enterprise leading to lack Landscape:
of a single view of supply chain performance. Multiple transactional
Inadequate supplier visibility. systems and system of
records including SAP
Lack of visibility to supply chain disruptions like supply shortage or service-
ERP platform
level violations.
implemented
No end-to-end holistic view of the supply chain to support real-time
SAP APO or other
information and decision making.
planning tools
Latency in supply chain information availability leading to inventory buffers implemented
and delay in response or shipments.
Approach/Strategy:
Supply Chain Control Tower should be implemented as the first step reduce
the latency and support enhanced supply chain visibility.
Supply chain event response times could be further enhanced by combining
Control Tower with IBP for Supply & Response as the next step. This reduces
the time to resolve the problem.
Further S&OP processes produce a more valid & vetted plan using the Control
Tower-enabled visibility to supply chain data.
33
Scenario 5: Improve SC Performance and
Information Visibility (cont.)
ERP
IBP Platform
APS
Control

Tower
Legacy Systems
Data Warehouses
S&OP
Suppliers
Customers Implementation Roadmap
Enable a single, holistic view of the business, supported by rich analytical

tools; individuals across various operations functions can come together to
collaboratively make decisions that benefit the enterprise as a whole 34
What Well Cover

Wrap-up
35
Where to Find More Information
http://help.sap.com
Follow Cloud SAP Integrated Business Planning
https://solutionexplorer.sap.com
Browse Solutions/By Line of Business/Supply Chain /Demand-
Driven Business Planning/Sales, Inventory and Operations
Planning
Tim Payne, The Impact of In-Memory Computing on Supply Chain
Management (Gartner, October 2014).
36
7 Key Points to Take Home
SAP IBP is not a replacement for SAP APO at this point in time
Many components of SAP IBP can complement your existing
APO and ECC investments
Evaluate the fit of SAP IBP platform and components based on
current and future requirements and business and technology
alignment
Implementing SAP S&OP is a good way to start on the IBP
migration, if that aligns with recommended outcome of the
assessment
SAP is very quickly ramping up the functionality available in SAP
IBP, including functionality that is not available in SAP APO, like
demand sensing, inventory optimization, and response
management
37
7 Key Points to Take Home
SAPs vision is to have a single uniform data model so that data

movements are eliminated, thereby reducing data latency
To fully realize this vision will take some additional
developments from SAP
Start your IBP migration journey with a pilot; this will help you
acclimatize, with a lower risk, to the new IBP platform and
considerations that accompany a cloud solution
Moving to cloud platform will require a change in the way IS
organizations manage security, upgrades, landscape strategy,
support, and enhancements
38
Your Turn!
How to contact me:

Sachin Shetty
Sachin.Shetty@ey.com
@shettysaching
Please remember to complete your session evaluation

39
Disclaimer
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or
an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective
companies. Wellesley Information Services is neither owned nor controlled by SAP SE.
EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Ernst & Young LLP
is an EY member firm serving clients in the US. For more information about our organization, please visit ey.com.
2015 Ernst & Young LLP.

All Rights Reserved.
1401-118151
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other
professional advice. Please refer to your advisors for specific advice.
40
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Copyright 2015 Wellesley Information Services. All rights reserved.

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SAP APO Versus SAP Integrated

Business Planning: Leading Advice

Understand the new planning modules from SAP within the

Current planning challenges in the marketplace

Analysis Inability to measure and improve performance

Decisions Inability to make rapid business decisions supported by real-time data

Efficiency Long planning cycle times, ineffective planning process

Supply Chain Supply Chain

Business Issues Solution Capability Business Capability

Inability to measure and improve KPI, analytics, reports,

High operational costs, functions working in Information visibility,

Harmonized data model,

Long planning cycle times, ineffective Simple user interface,

Current planning challenges in the marketplace

Excel UI Web UI Fiori Apps

Supply Chain Control Tower

Integrated Business Planning (IBP)

IBP for Sales and Operations Planning

IBP for Inventory IBP for Demand

IBP for Response & Supply

SAP Cloud HANA Platform

Statistical forecasting & statistical analysis of demand data

Efficiently position inventory to respond to uncertain demand & supply

Generation of operational supply plan at order level

HANA Cloud Integration

Current planning challenges in the marketplace

Process/Functionality Cloud (SAP IBP) On premise (APO/other)

Process/Functionality Cloud (SAP IBP) On Premise (APO/other)

Current planning challenges in the marketplace

Organizations need to do a detailed assessment of their process and functional

IS Organization & Process Technology & Architecture

Vision Vision states concepts, values and goals that might be

Strategy Establishes how to achieve the proposed vision

KPIs Defines and communicates strategic and process

Technology Defines and implements tools to be used to support

Organization Formalizes and disseminates, through the company,

People Skills and behaviors development, required for future

Frequency planning layers

Agendas and dynamics

Reference: EY copyrighted internal documents

Demand & Supply Planning (weekly, daily)

Scheduling and Order Promising (daily)

Reference: EY copyrighted internal documents

reacting vs. planning Latin America

Cross-functional causal factors are Implications

reacting vs. planning EMEA Management

Lack of advanced planning capabilities limit ability to optimize

A6 Cores Supply Forecasting A1: Demand

Sales & Operations Planning Supply Chain Planning

Reference: EY copyrighted internal documents

Roadmap should be developed with considerations to interdependent

Current planning challenges in the marketplace

Historical Data S&OP

HANA Cloud Integration

Annual Financial Plans

Typically S&OP is implemented with a sub-process or BU pilot. After the pilot,

Historical Data S&OP

HANA Cloud Integration

Annual Financial Plans

IBP platform could be further extended by implementing Control Tower for SC

HANA Cloud Integration

Adjusted Daily Forecast Inventory

Pilot Rollouts Pilot Rollouts

Improve short-term forecast accuracy positively impacting deployment,