Integrated business planning for sales and operations planning is a periodic business process that involves focusing on and synchronizing financial, demand, and supply planning. Most organizations follow a monthly process that consists of demand review, supply review, pre-sales and operations planning review, and executive review. Organizations may have many process steps according to their requirements.

The sales and operations planning process requires up-to-date forecast data to plan sales, production, inventory, customer lead time, customer back orders, new product developments, visibility and planning of critical components, strategic initiatives, and financial plans. The planning horizon and frequency vary based on the specific industry.

SAP Integrated Business Planning for sales and operations is built on SAP HANA’s aggregation and planning engine. SAP HANA can handle large amounts of data and calculations with high performance. SAP Integrated Business Planning for sales and operations features standard modeling for demand, supply, finance, and supply chain planning. Various planners can plan what-if simulations in real time and can plan very quickly at all levels due to the in-memory computing platform. SAP Integrated Business Planning for sales and operations enables real-time collaboration with various stakeholders to take input and consensus with transparent data to achieve an organization’s common goal — volume, revenue, and profitability. SAP Integrated Business Planning for sales and operations user interface is based on Microsoft Excel and web services.

I cover visibility and planning of critical components business solution execution in SAP Integrated Business Planning for sales and operations. I also list a few tips for you to use in the sidebar titled “Visibility and Planning of Critical Components.”

Supply Chain Planning Options with SAP Integrated Business Planning for Sales and Operations

SAP Integrated Business Planning for sales and operations integrates with other applications in the SAP Supply Chain Management suite. Figure 1 is a diagram of SAP Integrated Business Planning for sales and operations system architecture.

Figure 1

System architecture of SAP Integrated Business Planning for sales and operations

For example, consider a scenario in which an organization has a challenge with effective planning and visibility of critical components. Because of this pain point, the organization cannot fulfill demand on time. The organization implements and uses SAP Advanced Planning and Optimization (SAP APO) demand planning for statistical forecasting monthly or periodic demand at the product level.

After all the stakeholders reach a consensus on the statistical forecast, it is released to SAP Supply Network Planning for supply planning and for executing to SAP ERP Central Component (ECC). During execution, changes may occur for an increase in demand or a shortage of inventory at the product level as well the critical components level. These changes require corrective action and decision making. SAP Integrated Business Planning for sales and operations can be leveraged for real-time decision making and corrective action by involving and collaborating with various stakeholders.

SAP Integrated Business Planning for sales and operations 4.0 Feature Pack 1 powered by SAP HANA includes functionalities and options for various sales and operations planning processes. For example, you can use it to facilitate demand and supply processes for critical components planning and visibility.

Before I explain the functionalities of SAP Integrated Business Planning for sales and operations, I want to explain the concept of critical components. A critical component is a component that limits the supply and becomes critical to fulfill the demand in the supply chain. If the critical component is a part of many products with different quantities, then any planner will have difficulty handling the planning and visibility of these critical components. In an organization, identifying a critical component is based on different parameters, such as lead time, lot size, on-time delivery by the supplier, cost of the component, and quality of the component.

I focus on only planning and visibility of critical components. Consider this example: Product 1 and product 2 are produced at plant 1. Plant 1 has resources as resource 1 and resource 2; semi-finished product 1, component 1, component 2, and component 3 (Figure 2). Consider component 1 and component 3 as critical components for an organization.

Figure 2

A sample product manufacturing and critical component network

Visibility of Critical Components

In SAP Integrated Business Planning for sales and operations, the planning views defined in the Excel user interface (Excel UI) can be used for visibility and planning. These planning views include:

• Consensus Demand Plan: To view the Consensus Demand Plan at the product family level or product level
• BOM: To view the bill of material (BOM) of a product that contains the critical components
• Components Where used: To view the components where used to have the visibility of the same component used in various products
• Multilevel BOM: To view the product or components used at various levels of the BOM.

Now I explain the functionality of defined planning views for Consensus Demand Plan, BOM, Components Where used, and Multilevel BOM in SAP Integrated Business Planning for sales and operations.

The Consensus Demand Plan planning view has the details of a product family or product. You need to log on first to the SAP Integrated Business Planning Excel add-in for Microsoft with an authenticated user ID, a password, and an SAP Integrated Business Planning connection (Figure 3).

Figure 3

The planning view for the Consensus Demand Plan

The BOM of the product shows the components with quantity required to manufacture the product (Figure 4).

Figure 4

The planning vew for BOM

The Component or Material where-used planning view shows the component or material details for the products being manufactured (Figure 5).

Figure 5

The planning view for the Component where-used list

Figure 6

A sample planning View for Multilevel BOM

Planning of Critical Components

SAP Integrated Business Planning for sales and operations has the functionality to plan with planning algorithms for calculating a demand and supply plan. To use this functionality, you need to set up supply chain modeling in the SAP Integrated Business Planning for sales and operations system and provide the suitable authorizations and roles to the users. For my example, I assume that the supply chain modeling and required master data, transaction data, time profiles, and planning setup have been prepared and the system is ready to use.

To plan algorithms, you need master data, such as product, location, resources, BOM, lead times, and lot size (Table 1).

You also need planning data, such as consensus demand and component quantity (Table 2).

SAP Integrated Business Planning for sales and operations has two planning algorithms: heuristics and optimization. Both these algorithms are used to generate a supply plan.

In this article I consider heuristics — unconstrained demand and supply planning. The heuristics algorithm generates planning requirements at the planning level and provides the visibility of the customer demand along with the bottlenecks of the components. In an unconstrained heuristic, resource capacities, lead time, material or component availability to promise are not considered while generating the supply plan.

Defining the Critical Components and Planning Process

Critical components have to be identified and defined first in SAP Sales and Operations Planning. In this section I explain how to define critical components and related master data and planning processes.

Master data types: In the Excel UI, from the Excel ribbon, select the Manage button and from the drop-down list of options, select Single and enter the master data type from the drop-down list (e.g., product or customer). 

Here you can view the master data types that are already defined in the system. Based on the master data type, a mandatory primary key field will be visible on the screen (e.g., Product or Product ID).

After entering the value in the mandatory key field, click the create icon  for defining the master data. In the screen that appears (Figure 7), you can view and maintain all the attributes required for the master data type to complete the creation of the master data type. After you enter data for the attributes required for your planning, click the Add and Continue or Add button. Clicking one of these buttons saves data on the SAP HANA database at the back end of the SAP Integrated Business Planning for sales and operations system.

Figure 7

Creation of master data type – Product

Similarly, you can define relevant master data types. For example, you can display already-created master data types required for critical component visibility.

To display a master data type, log on to the Excel UI with valid credentials (user ID and password with required authorizations). From the Excel ribbon select the Manage button, and from the drop-down list of options, select Mass. This action opens the screen for Master Data Mass Management (Figure 8).

Figure 8

The Master Data Mass Management screen

Click the View button. This action opens an Excel worksheet that displays the details selected (Table 3).

You can display other relevant master data types that are defined for critical component visibility. For example, you can display master data details for a Component (Table 4).

Components: Components are reference master data types, and they are a part of products that are used as an input for the production process. The attribute for the Component is PRDFR (Table 4), customer (Table 5), Location (Table 6), Resource (Table 7), Resource Location (Table 8), Customer Source (Table 9), Shipfrom Location (Table 10), customer product (Table 11), Production source (Table 12), Location Source (Table 13), Production Source Item (Table 14), and Production Resource (Table 15).

Execute Critical Components Planning

Now I describe the unconstrained demand and supply planning – heuristic that is used for critical components planning.

A prerequisite of executing planning is configuration of the planning operator SCM, and the sub-planning operator is unconstrained planning.

Select the Consensus LA planning view for the Consensus demand plan (Figure 9).

Figure 9

The Consensus demand plan

From the same planning view opened on the screen from the Excel ribbon, click Simulate, and then select Unconstrained Planning from the drop-down list of options (Figure 10).

Figure 10

Execution of Unconstrained Planning

If any error message appears, select Show Messages (Figure 11).

Figure 11

How to see messages of Unconstrained Planning

Messages appear on the next screen (Figure 12).

Figure 12

Unconstrained Planning messages

Now review the output of the heuristic planning run by opening the Demand and Supply By Location planning view (Figure 13).

Figure 13

Sample output of Demand and Supply by Location

Review of Critical Components

During SAP Integrated Business Planning sales and operations’ demand review and supply review, critical components can be reviewed.

During demand review, use the Consensus Demand Plan and BOM planning view. These planning views provide details of the critical component with planning dependent demand.

During supply review, use the planning view Demand and Supply Location, which gives details of planning data (e.g., consensus demand, constrained demand, quantity, and projected inventory quantity). Depending on the business requirement, add key figures to view the planning data.

The Critical Component’s Visibility planning view is defined to get the visibility of a critical component (Figure 14).

Figure 14

The Critical Component’s Visibility planning view

In this planning view, the following details are defined:

• Planning level: Location description and product description.
• Key figures: Consensus demand plan Qty, Net Demand Qty, Projected Inventory Qty, and Inventory Target
• Filter: Location description equals plant 201 and product description LA 198 and C1001.

Based on the business requirement, define your own planning view with planning levels or key figures or modify the existing planning view as per the business requirement.

Configuration of Planning Parameters of Heuristics

Log on to the web UI of SAP Integrated Business Planning with your user ID and password. Click the configuration icon  and follow menu path Miscellaneous Settings > Manage Planning Operators. This action opens the screen shown in Figure 15.

Figure 15

The Planning Operator SCM

Planning Operator SCM is defined for supply planning. It is the SAP Integrated Business Planning standard planning operator.

The Unconstrained Sub-planning operator for unconstrained planning is supported for interactive and batch modes. The parameter ALGORITHIM_TYPE is defined with the parameter value INFINITE_WITHOUT_SHORTAGE (Figure 16).

Figure 16

The Unconstrained Planning Parameter for Planning Operator SCM

For critical component planning, unconstrained planning is used.

Tips

The process of critical components planning and visibility always was a challenge in SAP APO and ECC business solution implementation. I have covered implementation of a business solution for critical components planning visibility leveraging SAP Integrated Business Planning for sales and operations. Remember these tips when leveraging SAP Integrated Business Planning for sales and operations to improve visibility of critical components planning:

• Maintain a master data BOM containing components that are critical in SAP Integrated Business Planning for sales and operations. Components are maintained using a BOM.
• Based on your business requirement, maintain the BOM at a single level or multilevel. If the business requirement is just to view the critical component at demand side and not for the supply side, then maintain a single-level BOM. For both, use a multilevel BOM (production sourcing master data)
• Define your own dashboard chart to have a visibility of critical components
• Define key performance indicators (KPIs) for critical component visibility — a material shortage that can be viewed from a web UI
• Define alerts for component shortage
• Maintain planning based on the business requirement for the visibility of the critical component’s planning data (e.g., constrained demand quantity, and dependent production quantity).

Anjali Butley

Anjali Butley has more than 20 years of strong functional, business, and IT experience with domain expertise in supply chain planning and logistics.

She is a business analyst with more than 18 years of SAP experience in design and development of integrated supply chain solutions for large-scale enterprises. Her expertise includes process modeling, business process analysis, application implementations, production support, and presales across multiple client engagements in the SCM domain.

She has executed various types of SAP projects, such as implementation, global rollouts, enhancement, production support, business consulting, and program and project management in multicultural environments worldwide. Her industry exposure includes areas across major industry verticals, including IT consulting, consumer, high technology, life sciences, pharmacetutical, and discrete manufacturing.

She is always interested in exploring new SAP SCM applications and products and sharing her learning experiences with the SCM worldwide community.

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