In this blogpost, we will examine the need for end-to-end supply chain planning solution for the modern customer. We will see the rising importance of, and capability of SAP Supply Chain Planning software to create synchronous supply chain plans covering the entire D2O (Design to Operate) spectrum. We will list various knowledge resources for the explanation of integrated and synchronous planning between SAP Integrated Business Planning and SAP S/4HANA Manufacturing for Planning and Scheduling (MP&S) formerly known as Production Planning and Detailed Scheduling (PP/DS) .
End to End Supply Chain Planning
Investopedia defines Supply Chain and Supply Chain Management as follows:
“A supply chain is the network of individuals, companies, resources, activities, and technologies used to make and sell a product or service. A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer.”
“Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.”
Supply chain management encompasses various disciplines from Design, Plan, Manufacture, all the way to Deliver, consumption and Operate (the so-called Design to Operate Cycle).
One insight into the evolution of Supply Chain Management as a discipline comes from the book “Adaptive Supply Chain Management” by Dmitry Ivanov and Boris Vladimirovich Sokolov. The authors describe the 1950s and 1960s as the era of mass production and economies of scale leading to a focus on quality management. Improved quality of products led to individualization of customer requirements launching the era of customer centeredness in the 1980s. Inventory management and reduction in production cycles was the focus of this period. The wide variety of products, the need to react to market changes with agility and cutting the time to market required businesses to optimize internal processes and increase collaboration with suppliers resulting in lean manufacturing and just in time paradigms. From then onwards, companies concentrated on competitive advantages, core competencies, outsourcing, innovation, and collaboration fueled by rising globalization, information technology advances leading to the development of the modern supply chain management paradigm in the 1990s.
Fast forward to today’s world – always on, connected and informed customers are demanding high quality, individualized products with increasingly shorter time frames and with predictable availability. Supply chains today exist both in the physical and digital worlds with the so-called Digital Supply Chain being ever expanded with advances in Supply Chain Management software, increased volume and availability data and intelligent technologies such as artificial intelligence, machine learning, blockchain and internet of things.
For companies, meeting market requirements call for the realization that a great customer experience depends on a delightful product experience – and both factors are evolving every minute of every day. Customer demands need to be understood and predicted in real time and translated to design, manufacturing, logistics and operations teams, which requires a digital business plan that intelligently sets the pace and is constantly adjusting.
Supply Chain Planning Software
The Digital Business Plan needs to cover all areas of the Design to Operate cycle and cater to multiple levels of planning (Strategic, tactical, and operational) across multiple time horizons, different lines of businesses, multiple geographies, multiple organizations up and down the supply chain network. Naturally, the digital business plan needs to be used by the various functions in different level of details, and to achieve varying business outcomes. However, while providing such flexibility – it needs to be consistent and synchronous across all dimensions.
The above explained demands from the Digital Business Plan can be directly translated to business requirements for Supply Chain Planning software and highlight the importance of synchronizing the plans throughout the organization’s different lines of businesses. An intelligent enterprise requires an intelligent plan. In the modern global business landscape with first-hand experience of supply chain disruptions, sustainability requirements and economic volatility, this paradigm of an intelligent plan can be supported by Digital Supply Chain application suite that is:
- Infused with Intelligence (intelligent technologies for example machine learning, big data, artificial intelligence, blockchain and internet of things)
- Built in with Self Learning to sense demand, handle exceptions and allow complex and advanced analytics
- Provide a simple, intuitive, and seamless user experience and Business Process Integration across different Supply Chain Management applications to support continuity of the supply chain planning and execution workflow
- Support the sustainability targets and goals for customers by providing appropriate tools for collaboration and analysis across the supply chain network
SAP Supply Chain Planning Software Suite – Intelligent Plan for the Intelligent Enterprise
Supply Chain Planning solutions from SAP support holistic, synchronized planning for better decision-making that enables businesses to adapt plans quickly to actual demand and supply. Using these applications, organizations can unify and transform planning – moving from sequential manual activities to streamlined, automated and integrated processes. For more details on the SAP Supply Chain Planning Solution Portfolio, please visit the link below:
A concrete example of synchronized planning supported by real-time integration is the integration between SAP Integrated Business Planning and SAP Manufacturing for Planning and Scheduling (MP&S aka ePP/DS). There are multiple ways in which this integration flow could be realized for example:
Integration Type 1: Tactical Integration
- A supply plan is created in SAP IBP time-series-based supply planning to cover the demand.
- Per period (or “bucket”) the following elements are integrated to embedded PP/DS:
- stock transfer requisitions (if applicable)
- production receipts as “time-series-based bucket order” containing the quantity of a location product and the corresponding source of supply
- Detailed planning is done in embedded PP/DS:
- The time-series-based bucket orders are converted into planned orders by using the Planning of Standard Lots heuristic or exploded in case they are integrated as firmed orders
- Planner can adjust the supply plan if necessary
- Possibility to integrate back planned orders, production orders, and procurement orders on an aggregated level from embedded PP/DS to SAP IBP time-series-based supply planning into confirmed key figures. By doing so the embedded PP/DS planning results are respected in the next planning run in SAP IBP.
Integration Type 2: Operational Integration
- A supply plan is created in SAP IBP order-based supply planning to cover the demand.
- The plan includes all kinds of planned supplies:
- Distribution plans (stock transfer requisitions)
- Production plans (planned orders)
- Inter-plant supplies (stock transfer requisitions)
- Purchasing plans (purchase requisitions)
- Detailed planning is done in embedded PP/DS (A) Standard Process with PPIM1 – Detailed Scheduling Delegated):
- Integrate Operational Supply Plan (OSP) planned orders with PP (via SDI) and PP/DS (via Core Interface) on SAP S/4HANA
- Handover due OSP planned orders to Detailed Planning and Scheduling (DPS)
- Perform automated detailed scheduling using DPS algorithms, manually change orders, or improve detailed scheduling manually on the detailed scheduling board
- Trigger conversion of DPS planned orders to production orders
- Integrate demand and supply elements with IBP OBP via SDI
Note: Other integration scenarios for production planning scenarios are also available and explained in SAP note 3103434
Synchronized Planning – More Reading and Resources
Here are some resources for the readers to better understand SAP’s vision for Synchronous Planning and guidance around how to implement it:
In conclusion you now know the rising importance of connecting supply chain management applications specifically in Supply Chain Planning and how SAP is catering to this challenging by allowing for superior real-time integration between Supply Chain Applications and achieve the vision of connecting the board room to the machine.
What are your thoughts on seamless integration of business processes across multiple Supply Chain Management applications and how is your organization or your customer dealing with addressing these requirements?