We highlighted demand forecasting as a key challenge in SAPinsider's recent research
Supply Chain Planning in The Cloud. The quality of forecasts also plays a key role in inventory management, which has emerged as another key focus area for SAPinsiders. We will also publish a research report focused on this specific topic of inventory management and optimization (November 2022). Some challenges of demand forecasting are also a result of the input data leveraged for forecasting. One challenge stems from marketing promotions data. Marketing promotions are the nature of the business in many industries, and the primary aim is to boost sales. However, promotions also created nuances from a demand planning and forecasting perspective. Fortunately, for SAP IBP users, the tool provides multiple features and functionalities for promotion planning and management. This article will review the promotion planning and management features in SAP IBP.
Addressing promotion-related uplift in preprocessing stage in SAP IBP
SAP IBP has an algorithm that focuses on this. It helps remove the sales lift because of promotion while using the historical data for short-term demand sensing. In this approach, the sales history used for demand sensing is calculated based on the sales uplift because of promotion and consensus forecast. The algorithm then substitutes values based on sales life and forecast in the dataset. We calculate the value using the following formula:
Value = Sales History X [Consensus forecast + Planned sales lift)]
Maintaining promotion plan and its usage in SAP IBP
Promotion plans are a critical element of demand planning; hence, lift data should be integral to any robust demand planning feature or solution. And this is the case with SAP IBP as well. We incorporated projected promotion uplift value in the forecast key figure data during the consensus demand finalization process. However, you ensure we aligned the uplift key figure number to the forecast planning level and the consensus demand key figure to complete the demand calculations.
SAP IBP integration with promotion management systems
Many companies have separate systems that cater to promotions management (like a CRM system). Seamless integration with these systems is imperative. The good news is that SAP IBP can be integrated through the SAP Cloud Platform to transfer the uplift information directly into IBP from the source system. However, remember that some data split or disaggregation may be required. This is because the promotions data in systems like CRM is maintained at the period level, whereas location is an important planning level from a supply chain planning perspective.
Analyzing promotions
The dedicated "Analyze Promotions" app helps with the analysis. This app shares detailed information and analysis for promotion planning and can analyze promotions data that lives in an external system or locally in SAP IBP. Examples of the capabilities available in this app are:
- Splitting and disaggregation (to make the data suitable for analysis, as mentioned previously)
- Including or excluding promotions data from demand
- Create a link for the promotion of the management collaboration process through SAP Jam integration
- Population "Promotion Success" field that shows the success of a promotion.
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