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Why Planners stop using SAP IBP
Why Planners stop using SAP IBP
Planners stop using SAP IBP when the outputs of the system do not match the supply chain realities that they are planning for.
Planners stop using SAP IBP when the outputs of the system do not match the supply chain realities that they are planning for.
SAP IBP is a highly configurable system capable of supporting diverse industries, from consumer goods and retail to mining and automotive. Because of this flexibility, implementers must tailor the system not just for the industry, but for the unique operations of your specific company. However, the customisation of the SAP IBP system often falls short leaving planners not confident with the outputs of the demand forecasts and supply plans.
In addition, most SAP IBP implementations are built on the basis of how the business worked at a specific point in time. However, supply chains change constantly. The markets change, prices change, demand patterns change, suppliers change, lead times fluctuate, and production constraints shift.
If the system's data and settings are not updated to match these changes, the planning results become inaccurate. This forces planners to stop trusting and using the system and resort to planning on spreadsheets.
The most common root causes of SAP IBP issues
The most common root causes of SAP IBP issues
Configuration & Performance
Configuration & Performance
When a system is over-configured, modelling every detail at the lowest level of granularity, the system performance suffers. The result is planners frustrated by the slow run-times.
Conversely, when a system is under-configured, the output lacks the necessary detail for execution.. The result is planners creating their own offline tools to get the job done.
Data Quality & System Integration
Data Quality & System Integration
When master data inputs are inaccurate, the planning algorithms generate incorrect outputs. This leads to poor decision-making and a loss of trust in the system.
In addition, if the integration between SAP IBP and the source systems is unreliable, the data foundation is compromised before the planning cycle even begins. Without seamless data flow, the system cannot reflect the current reality of the supply chain.
Demand planning process
Demand planning process
The statistical forecast is designed to serve as an objective, scientific baseline for the demand plan.
If the statistical forecast model is not appropriate for the product, the forecast will be inaccurate, causing planners to override the stat forecasts with manual inputs.
The reliance on manual inputs introduces human bias into the demand signal. The result is a distorted forecast that creates bullwhip effects in the downstream supply plan.
Inventory & Supply planning processes
Inventory & Supply planning processes
Effective inventory management requires dynamic targets that adjust to demand and supply volatility. When safety stock levels are static, the business suffers from two issues: excess working capital on stable products, and service risks on volatile ones.
Simultaneously, if the supply plan does not reflect real constraints (capacity and materials), the system generates unfeasible proposals. This forces the supply chain into a reactive firefighting mode, driving up expediting costs to meet customer orders.
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Assess your SAP IBP system health
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