The Synchronization Imperative for Vertically Integrated Titans with SAP IBP: Part 1

Vertically integrated companies control their destiny from the moment raw materials are unearthed to the second a finished product lands in a customer’s hands. This end-to-end control promises efficiency and can help secure market dominance. Yet, the core challenge here lies in keeping everyone and every plan level in sync.

In an interview with SAPinsider, Cameron Schwartz, Director of Digital Supply Chain in the SupplyChainPaths practice at CloudPaths, noted: “Typically, the biggest disconnect is a misalignment between upstream and downstream plans. But it can be difficult to understand how different changes to products or raw materials affect the rest of the plan.”

Compounding this hurdle are the almost inevitable internal silos among production, procurement, distribution logistics, and demand forecasting, which results in countless hours spent consolidating data to put together a unified operational picture. This creates a barrier to agility and responsiveness in a fast-moving market.

However, SAP Integrated Business Planning (IBP) can shift this planning philosophy. “SAP IBP helps create a single source of truth, where different supply chain functions happen in one synchronized plan,” Schwartz said.

A Single Source of Truth

For vertically integrated organizations, the immediate, transformative impact of SAP IBP lies in its ability to provide that elusive holistic view. “Changes to a procurement plan cascade to what the manufacturer can allocate as finished goods to fulfill customer demands throughout the process,” according to Schwartz. This isn’t static visibility. It enables dynamic, interconnected, and informed decision-making in near real-time.

One of SAP IBP’s most potent capabilities in this arena is its planning functionality. Schwartz emphasized its significance: “Users can do what-if planning  and scenario-planning across their entire supply chain.” Thus, planners are no longer confined to tweaking one element of the system and then anxiously waiting to see the downstream fallout.

He elaborates: “With IBP, planners can create a what-if plan saying, ‘if I adjust the amount that I can supply from this subcontractor, or if I decide to increase this resource capacity, how much more demand could I fulfill across different levels?’” This power to simulate various scenarios and accurately foresee consequences across every tier of the value chain can break down the silos that arise from mergers, acquisitions, or years of uncoordinated organic growth.

A Use Case in Manufacturing

For instance, a seemingly minor decision at the raw material level – perhaps a sudden quality issue or raw material scarcity – can disrupt a production schedule for high-value finished goods. Here’s where SAP IBP shines. According to Schwartz, “Running the  Optimizer or Finite Heuristics in SAP IBP makes decisions related to that raw material take into account the entire supply chain plan.”

He added that SAP IBP takes all the different multi-level stages in manufacturing and prioritizes them based on trying to fulfill the following:

• The most amount of demand
• The material or process that can have the greatest financial impact

SAP IBP allows for a sophisticated, priority-based allocation, weighing the financial impact of selling the material as-is versus reserving it for internal production that might yield a better overall margin. Furthermore, it can prioritize fulfilling already committed open orders, thus safeguarding customer relationships and preventing backlog escalations.

Stay tuned for Part 2 of this interview, where Schwartz explores the common stumbling blocks on the journey to synchronization, why this capability is necessary today, and how expert guidance from partners like CloudPaths’ SupplyChainPaths expertise can pave the way for success.

What This Means for SAPinsiders

Champion IBP as a strategic unifier. Recognize that SAP IBP’s power to create a single source of truth is best realized when all stakeholders grasp its potential early. SAP professionals can mirror CloudPaths’ approach by advocating for solutions like its rapid deployment accelerators. These tools make SAP IBP viewable and usable as quickly as possible, helping diverse teams concretely understand how it unifies planning and breaks down traditional silos right from the project’s inception.

Maximize what-if capabilities. The actual value of SAP IBP’s what-if planning is unlocked when stakeholders can actively participate in scenario modeling. CloudPaths achieves this by integrating its rapid deployment accelerators with cross-functional design thinking workshops. This allows SMEs to see and feel SAP IBP’s dynamic capabilities, making scenario analysis more insightful and driving better, proactive decision-making based on a shared understanding of the integrated model.

Drive financially optimized decisions with foundational integrity. SAP IBP’s ability to guide financially sound allocations during constraints relies on clean data and clear business rules. SAP professionals should adopt CloudPaths’ emphasis on strong data governance early in the implementation. Combining this with insights from cross-functional design thinking sessions that clarify priorities ensures IBP’s optimizer and heuristics have the reliable foundation needed to deliver impactful, financially-driven outcomes.