Background

A leading Consumer Packaged Goods (CPG) manufacturer faced significant challenges in managing its sales and operations planning (S&OP) processes. The company operated across seven global sales offices, each independently creating sales forecasts without consensus, leading to poor forecasting accuracy and inefficiencies.

Challenges

• Seasonal Demand: The business had to manage highly seasonal demand with manual, iterative planning processes.
• Capacity Constraints: Constrained warehouse and production capacity, along with raw material supply constraints, made planning difficult.
• Fragmented Processes: Independent demand plans from different sales offices led to poor coordination and inefficiencies.

Objectives

The main objectives of implementing the S&OP IBP Optimizer were:

• Unified Planning: Standardize the S&OP processes across all global sales offices.
• Improved Forecast Accuracy: Enhance forecasting accuracy to reduce inventory inefficiencies and production capacity issues.
• Integrated Systems: Integrate S&OP with the existing SAP S/4HANA ERP platform.

Implementation Approach

• Design and Implementation: The project involved designing and implementing the SAP IBP S&OP platform, integrated with SAP S/4HANA.
• Best Practices: Leveraged best practices to quickly define new S&OP processes and organizational structures.
• Rapid Deployment: Used a fixed price, fixed scope rapid implementation timeline to ensure quick deployment across the organization.

Results

• Enhanced Visibility: Improved visibility into demand and supply across all sales offices.
• Better Forecast Accuracy: Significant improvements in forecast accuracy, leading to better inventory management and reduced production capacity issues.
• Streamlined Processes: Unified S&OP processes reduced inefficiencies and improved decision-making.

Lessons Learned

• Stakeholder Engagement: Continuous engagement with stakeholders was crucial for the success of the project.
• Data Quality: Ensuring high data quality was essential for accurate planning.
• Change Management: Effective change management strategies were key to user adoption and project success.

Configuring the S&OP IBP Optimizer involves several key steps to ensure it aligns with the specific needs of the organization. Here are some of the main configurations

Key design aspect in S&OP IBP Optimizer

1. Demand Planning Configuration

• Forecast Models: Setting up statistical models for demand forecasting, such as moving averages, exponential smoothing, and causal models.
• Promotion Planning: Configuring the system to account for promotional activities and their impact on demand.
• Consensus Demand: Establishing processes for generating a consensus demand plan by integrating inputs from various stakeholders.

2. Supply Planning Configuration

• Supply Network Model: Defining the supply network, including production facilities, warehouses, and transportation routes.
• Capacity Constraints: Setting up constraints for production capacity, warehouse storage, and transportation.
• Inventory Policies: Configuring inventory policies, such as safety stock levels, reorder points, and lot sizes.

3. Optimization Algorithms

• Objective Functions: Defining the objective functions for the optimizer, such as minimizing costs, maximizing service levels, or balancing both.
• Solver Parameters: Configuring solver parameters to control the optimization process, including time limits, convergence criteria, and solution precision.
• Scenario Planning: Setting up scenarios to evaluate different planning strategies and their impact on the supply chain.

4. Integration with SAP S/4HANA

• Data Interfaces: Establishing data interfaces between SAP IBP and SAP S/4HANA for seamless data exchange.
• Master Data Synchronization: Ensuring master data consistency across systems, including products, locations, and resources.
• Process Automation: Automating data transfer and process execution to reduce manual effort and improve efficiency.

5. User Interface and Reporting

• Dashboards: Configuring dashboards to provide real-time visibility into key performance indicators (KPIs) and planning metrics.
• Reports: Setting up standard and custom reports to support decision-making and performance monitoring.
• User Roles and Permissions: Defining user roles and permissions to control access to different functionalities and data.

6. Change Management and Training

• Training Programs: Developing training programs to ensure users are proficient in using the new system.
• Support Mechanisms: Establishing support mechanisms, such as help desks and user manuals, to assist users during the transition period.