Demand-Driven Business Planning with Response and Digital Supply Chain Orchestration

Businesses are reeling under the pressures of an uncertain and volatile world. This has added to complexities across the extended supply chain. Organizations need an Enterprise Intelligent Digital Framework (EIDF) that provides a single source of live information and offers a personalized user experience that delivers instant insight on any device.

An intelligent digital framework can supply real-time business insights and processes, end-to-end visibility, and simplified data models that accelerate, automate, and streamline logistics with advanced technologies like artificial intelligence. A framework for digital supply chain results in faster business outcomes and reduced operational costs. It also provides complete, cognitive, connected, compliant, and capable solutions, particularly for customer centricity, individualized products, resource scarcity, and the sharing economy.

Supply chain, research and development/engineering, manufacturing, asset management, and sustainability lines of business (LoBs) come under one roof. S/4HANA enterprise management is at the core of these digitized/automated business processes and enables real-time, mission-critical business processes across the enterprise like order-to-cash, produce-to-pay, plan-to-product, etc.

SAP leads across all LoBs and provides best-in-class solutions. These solutions are for demand-driven business planning, response and supply orchestration, efficient logistics and order fulfillment, sustainable product innovation, automated agile manufacturing, and operational excellence.

This article focuses on the key enablers of demand-driven business planning with response and supply orchestration. It also focuses on how SAP solutions for inventory helps companies gather data and perform analyses to manage uncertainty and capitalize on opportunities. The main value drivers of these solutions follow:

• Balancing demand and supply across supply chain through cross-functional planning processes
• Integrating financial objectives to ensure that best and profitable plans are chosen
• Maximizing customer service while minimizing the amount of working capital tied up in inventory
• Optimizing inventory turns for every item at every location
• Rapid and responsive production planning with asset excellence

Customer-Centricity Challenges

Digitization has reinvented the economy. Businesses are now interconnected in real time. Digital economy has transformed the way we live, work, how businesses run, and how society functions. What started with people networking platforms like Facebook and LinkedIn, evolved into business networking platforms like SAP’s Ariba Network.

Organizations are transitioning into real-time enterprises. The supply chains are now connected, intelligent, responsive, and predictive. Several business drivers are coming together that support the need for transformed digital supply chains. Customers need to be served differently, and collaboration with suppliers and partners needs to be in real time.

Leveraging and optimizing resources is the focus for businesses, whether it is about the people employed or the materials managed. Companies need to create a digital framework to support the extended supply chain.

Customer-centricity in the context of supply chains has historically been demand-driven. But with connected, informed, and influential customers, customer-centricity has evolved. It is now market-driven. With the rise of social media, businesses are sensing and capturing all forms of demand from structured and unstructured sources. This has given rise to multiple channels to serve customers.

However, this has also brought complexity to the supply chains that support them. To satisfy omni-channel sales, businesses need omni-channel fulfillment. Customers expect product deliveries on the same day or the next day. This introduces the need to think about demand differently.

Today’s customers are more demanding than ever before due to the following:

• Rise of the middle class in emerging markets
• Emergence of connected customers
• Proliferation and convergence of buying channels
• Explosion of consumer and customer data

Business planning is becoming increasingly critical due to market dynamics evolving rapidly. Channels are proliferating and converging. But traditional business planning processes are cumbersome, and system and organizational silos prevent effective planning.

Demand-driven business planning enables customer-centric supply chains. To overcome this, leading companies are focusing on three key business priorities. They do this by aligning strategic and operational plans, sensing short-term demand, and understanding the demand network.

Companies are focusing on becoming demand-driven and responsive and are transforming their linear supply chains into a customer-centric demand networks. This network leverages customers, companies, and supplier data to optimally produce products, efficiently stock goods, and deliver products to customers reliably and quickly in an omnichannel fashion.

SAP’s network solutions empower supply chain, sales, and marketing professionals with insightful and actionable demand network analytics. These solutions enable companies to sense and respond to demand insights by combining demand signals and market data with internal data.

They manage the entire merchandising lifecycle in multichannel formats like purchasing, assortment, pricing, promotion, and inventory management, as well as simplifying the management of wholesale, retail, and manufacturing processes with a single solution.

SAP Demand Signal Management (DSiM)

SAP provides a powerful solution, SAP Demand Signal Management for Demand Networks, that enables companies to be customer-centric. DSiM provides a single source of demand truth and is built on SAP HANA Business Suite. This helps build a purposeful Fiori application that can be easily personalized to help monitor and manage the data agreements from all sources at a centralized location.

It enables companies to collect third-party demand signals and market data. Other relevant demand signals like consumer sentiments from social media, as well as demand-influencing data like weather and geography, can also be accommodated in DSiM.

DSiM has powerful data management capabilities to cleanse, harmonize, and enrich data from disparate sources into useful information. This is accomplished through automated business rules in an exception-driven framework. Several out-of-the-box key performance indicators are also provided, and companies can easily build their own KPIs that can be extended to match individual business needs.

Product Customization Challenges

Customized solutions and products are everywhere. We can configure cars, design sneakers, and even develop technology solutions. But companies need robust product platforms that can be used for customization. As manufacturers try to keep up with the need for personalized products and the changing demand market, they look for agility.

Product customization is becoming a norm and is impacting the way that products are designed and delivered. Some of the business trends driving the need and demand for the individualization of products and solutions in the market today are discussed below. 

Individualization

Customers are becoming more knowledgeable and demand unique, personalized customer experiences. They not only want to order a product whichever way they want—be it in a store, online, or via their mobile device—but they also want to personalize it according to their needs.

Innovation Speed

Empowered customers also expect products to be delivered instantly. Companies need to take products to the market faster than ever before and be the first movers. However, shorter product lifecycles and faster innovation cycles are increasing pressure on manufacturers to increase the time-to-market by enhancing the handoff from design to production.

Companies want to maximize the return on investment before the next innovation wave makes their products obsolete. Collaboration with partners to drive flexible, open, and dynamic innovation processes is critical. And customer input needs to be built into the process to both identify and respond to trends in the market.

Smarter Products

Smarter products are driving new business models. Companies are rethinking the value delivered by their products. For example, John Deere tractors are now equipped with sensors to transmit moisture and temperature data from the fields. But personalization strategies require robust platforms that can be used as a base for customization.

One example of a strong platform base can be cited from the automobile industry. BMW allows customers to customize the base model. From a couple of base options, anyone can have personalized car features. However, there is a need for a product innovation platform that brings together MCAD and ECAD models with software.

Demand-Driven Business Planning with Response and Supply Orchestration

Demand, Response, and Supply Management

Comprehensive demand management enables fast response, real-time demand visibility, and anywhere access with powerful statistical tools. Response and supply planning enables quick and responsive supply management across networks as well as support for tactical and operational supply -ide planning.

Companies need to develop an actionable plan that considers material and capacity constraints as well as customer priorities. Meeting customer expectations and managing channel complexities with response and trust enables competitive edge. Companies need to integrate order promising and allocations with constrained supply, and perform root cause analysis and collaborative problem resolution.

Demand and Response Networks

Demand and response networks allow powerful insights into sales and market trends by combining demand signals and market data with internal data. Response network solutions from SAP enable end-to-end visibility, process automation, and increased responsiveness. SAP supports effective collaboration through a range of supply, demand, and inventory replenishment processes. Companies can remove latency from networks and can align digital and real-world supply chains in real time.

Channel master control tower to orchestrate the network and manage problems can be used for end-to-end visibility, performance management, alerts, and problem resolution. Companies can onboard suppliers and customers to enable innovative collaboration, prioritize demand, and intelligently plan constrained supply for allocations management and order commitments.

Root cause analysis can be done to understand issues and drive resolution while supply and inventory planning for ‘real world’ constraints can be proactively done. Replanning and simulation of scenarios in real time allows for effective response and supply planning. 

Production Planning and Scheduling

Companies need to orchestrate the transition from planning to execution, remove fixed lead times, and balance agility and efficiency. With fast and responsive production planning and scheduling scenarios that are closely linked to manufacturing execution, companies can generate production plans to fulfill demand and replenishment signals considering the production rules of manufacturing sites. Scheduling resources while keeping in mind the due dates, capacity, and material limitations should be done while minimizing changeovers and taking sequence constraints into account.

SAP Integrated Business Planning for Inventory

SAP delivers an Integrated Business Planning suite of solutions. It is a comprehensive digital foundation that delivers key capabilities that companies need to gain a competitive edge. SAP IBP for sales and operations supports the end-to-end S&OP process from sales input to executive reviews. The solution provides a unified model of demand, supply, and financial data for real-time planning and analysis. It is powered by SAP HANA and enables fast and agile planning.

Companies can view results in seconds and are equipped with rapid decision-making capabilities and quick responses to changes. Real-time scenario planning and simulation allows for multiple plan comparisons and determines the most profitable plan. The solution leverages SAP Jam for collaboration to engage key stakeholders across business functions. This includes process orchestration, connecting people, process modeling, process notification workflows, and process dashboard.

Companies need to align their strategic and operations plans and find ways to maximize their working capital investments to ensure that they get the products they want when they want them. SAP’s IBP for inventory leverages best-in-class algorithms to optimally position inventory in the supply chain. These algorithms can capture complexities and uncertainties associated with digital supply chains, including supply factors such as lead times, lead time variability, and minimum order quantities.

They can also understand the demand coming in and assess variability whether it is normal, intermittent, or seasonal demand. Inventory targets can be set for distribution and manufacturing locations for all levels of the bill of materials including finished goods, work in process, and raw materials.