Q: Why do I need SAP IBP when SAP S/4HANA seems to meet my needs of demand and supply planning? I need no AI/ML/IoT. In principle I have no constraints in Production, handling and storage.
A: If that is the case you do not need IBP. As long as you can live with basic product x location level demand forecasts and a basic MRP, nothing wrong.
Q: When should I go for SAP IBP?
1) When you have multiple ERP systems but planning CAN be centralized partially or wholly. E.g. India and Pakistan have same vendor in Turkey that is also a contract manufacturer for ten other legal entities of the ‘enterprise’ but integration ensures that Pakistan’s Purchase requisition will go to Pakistan and India’s purchase requisition will go to India.
2) When source of supply (A vendor or a manufacturer or any supply location) is conditional on many things. viz. Costs. Lead times, Obligations, Agreements, other priorities.
3) When your network has multiple plants and warehouses stocking more or less similar / overlapping products. Marvel if I can fulfill from this warehouse in Goa to that customer in Bengal? (ERP won’t do that)
4) When you have ‘necessary evil tiers’ in your supply chain esp. on distribution side. (e.g. one regional warehouse to another local warehouse to finally some distributor). I hate these supply chains, but they exist because of historical reasons. Like remote locations. Long lead times. Uncertain supplies. Think Tibet, Nepal and Yakutia).
5) When you must react quickly to changing demand. In theory IBP ‘reacts’ and ‘matches’ demand to supply. This can matter if you are into fast moving consumer goods, Spares and MRO supplies or quick commerce firm with 50 dark stores in towns.
5) When your forecasting needs are sophisticated, driven by attributes of products and locations and even some minor events can change demand quickly (spikes and lows) e.g. Fashion, Shoes, McDonalds, iPhones. So, you need to ‘see’ and ‘feel’ demand from multiple dimensions. and update forecasts. E.g. forecast for a sub-brand instead of forecasting for a SKU. Unless sub-brand is a part of the product master in SAP S/4HANA somewhere (which is highly unlikely)
Q2: What does it take to implement IBP?
A2: A mature consultant with 25+ years of experience who earlier worked in supply / demand / production planning in large set ups for at least 15 years followed by some training on SAP IBP’s capabilities. Configurators galore.
Q3: How much does it cost to implement IBP?
A3: For under 100K USD you can implement IBP Demand and Demand Sensing in under 3 calendar months. For another 200K USD and another 3 months, you can implement the supply side planning (Supply, S&OP, Inventory Optimization). Go slow. Ask your consultant. Else you will end up with another expensive typewriter.
