integrated business planning (ibp): a tale of two perspectives

Spinnaker Proprietary & Confidential 2014

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Integrated Business Planning (IBP):

A Tale of Two Perspectives

December 9th

12:15PM – 1:00PM EST



Founded in 2002 as a Supply Chain Planning consulting firm,

Spinnaker Management Group has become a holding company for several brands.

350+ resources

200+ clients globally

Spinnaker Overview

ERP & CRM

Maintenance

HQ Denver

Supply Chain

Services

HQ Houston

Technology

Staffing Services

HQ Pittsburgh



Introductions

David FosterSenior Manager

• An SAP-focused supply chain functional consultant with over 25 years of industry and IT experience

• Experience with hands-on cross module requirement analysis, design/development, configuration

• Implementation experience in SAP IBP/S&OP, APO DP/SNP/PPDS/TPVS/Alert Monitor, and ECC/MM/PP as well as SAP/BW

Jay NearnbergSenior Manager

• A supply chain professional with over 30 years of industry and consulting experience

• Experience driving supply chain transformations/improvements, including organizational development, process reengineering, and systems implementation

• Specialty in S&OP, planning, logistics, metrics, and inventory management



Goals For The Session

1. Clarify understanding of what Integrated Business Planning (IBP) is, both

from a process and from a technology point view

2. Share Spinnaker’s Point Of View on IBP

– Typical performance gaps and what’s behind them

– Our framework for IBP and its role in improving performance

3. Review Integrated Business Planning from SAP

– Advanced Planning tools and IBP – How do they work together?

– What is SAP’s IBP suite?

– Where do you start?

4. Describe Spinnaker services that help our clients achieve successful IBP

implementations



Integrated Business Planning (IBP) –

One Acronym, Two Definitions

Process-Focused Definition:

IBP is typically used to refer to highly mature (Stage 3-4) Sales & Operations Planning (S&OP)

processes. At this point companies effectively synchronize the overall company and extended

planning process intended to align financial, supply chain, and go-to-market business decisions.

SAP’s Software Definition:

SAP Integrated Business Planning is a suite of planning applications focused on S&OP, Demand,

Supply, and Inventory Planning that provides essential technology support for achieving advanced

IBP capabilities.

S&OP/IBP Maturity Model

STAGE 1REACTING

STAGE 2ANTICIPATING

STAGE 3COLLABORATING

STAGE 4ORCHESTRATING

Development of an operational plan

Demand and supply matching

Internal cross-functional

collaboration and profitability focus

Extended supply chain collaboration and

financial optimization

S&OP/IBP

Strategy

Goals



Customer service levels are unacceptable – deliveries take too long or are incomplete,

promise dates constantly slip, and information is inaccurate

Sales falling short of plan, with repeated cycles of finger pointing over who’s responsible

for the gap and lots of wasted effort on fire drills

Mismatch of supply and demand cause shortages of some products while others are

“pushed” at quarter end to make the number

Sales, Marketing, Finance and Supply Chain functions seem to be operating to different

numbers “We spend a lot of time reconciling different views of what ‘demand’ will be”

New product rollouts never seem to be able to launch and ramp with predictability

We keep creating excess / obsolete inventory across the network while simultaneously

experiencing shortages

“Our Excel-based process won’t scale, doesn’t align with real world demand or supply,

and doesn’t allow us to evaluate alternatives”

Typical Business Performance Gaps

Driving S&OP/IBP Implementations



Understanding the Root Causes

of Performance Gaps

Lack of accurate sales input to demand and supply planning

Poor recognition of marketing intelligence and sales

Missed sales opportunities

Excess inventory required to cover lack of visibility

(volatility) to near-term demand

Poor service and “whipsaw” responses to shortages

“Blanket” or “rule of thumb” inventory levels leave many

items with excesses or shortages

Simultaneous service issues and excess inventory

Excel falls short of S&OP process requirements

Existing planning tools aren’t designed for flexible scenario

analysis

Performance Gaps

Ineffective collaboration processes and tools lead to

consistent capture of actionable sales intelligence and

disorganized demand planning & consensus

Highly manual and disconnected planning processes

(e.g., financial targets not aligned with supply chain)

Poor policy alignment across inventory goals, financial

objectives, and customer service targets

“Top-down” forecast mandates with consequent

amplification of error vs. true demand

Lack of analytical capabilities supporting the demand

planning process

Lack of analysis and reporting tools to support the

business requirements

Lack of training and resources to effectively maintain

models and data

Root Cause

Low forecast accuracy at multiple levels

Lack of confidence in forecast by supply planners leads to

discounting / ignoring of forecasts in favor of history



• What is the biggest challenge preventing your

organization from achieving advanced IBP performance?

– Disconnected planning processes

– Ineffective collaboration processes and tools

– Poor policy alignment

– Lack of analytical capabilities and reporting tools

– Lack of training

Flash Poll



• Spinnaker bases our IBP designs on a proven best-practices framework that separates

IBP activities into Demand, Supply, and IBP processes

• This framework outlines an integrated Demand, Supply, and IBP process.

Spinnaker’s Structured S&OP Approach

S&OP CycleSUPPLYDEMAND

Consensus

Demand

Planning

Closed-Loop S&OP

Financial

Analysis

Executive

Review

Demand-

Supply

Balancing

Forecasting

Analytics

Consensus

Demand

Independent

Forecasting &

Customer

Collaboration

Constrained

Supply

Planning

Inventory

Planning

Supplier

Collaboration

& Commits

Supply

Response

Financial

Plan

Scenario

Analysis

Spinnaker’s IBP Process Framework





Consensus

Demand

Planning

Demand-

Supply

Balancing

Constrained

Supply

Planning









Consensus

Demand

Planning

Closed-Loop S&OP

Executive

Review

Demand-

Supply

Balancing

Consensus

Demand

Constrained

Supply

Planning

Supply

Response


Financial

Plan








Consensus

Demand

Planning

Closed-Loop S&OP

Executive

Review

Demand-

Supply

Balancing

Forecasting

Analytics

Consensus

Demand

Constrained

Supply

Planning

Inventory

Planning Supply

Response

Financial

Plan









Consensus

Demand

Planning

Closed-Loop S&OP

Executive

Review

Demand-

Supply

Balancing

Forecasting

Analytics

Consensus

Demand

Independent

Forecasting &

Customer

Collaboration

Constrained

Supply

Planning

Inventory

Planning

Supplier

Collaboration

& Commits

Supply

Response

Financial

Plan









Consensus

Demand

Planning

Closed-Loop S&OP

Financial

Analysis

Executive

Review

Demand-

Supply

Balancing

Forecasting

Analytics

Consensus

Demand

Independent

Forecasting &

Customer

Collaboration

Constrained

Supply

Planning

Inventory

Planning

Supplier

Collaboration

& Commits

Supply

Response

Financial

Plan

Scenario

Analysis









Consensus

Demand

Planning

Closed-Loop S&OP

Financial

Analysis

Executive

Review

Demand-

Supply

Balancing

Forecasting

Analytics

Consensus

Demand

Independent

Forecasting &

Customer

Collaboration

Constrained

Supply

Planning

Inventory

Planning

Supplier

Collaboration

& Commits

Supply

Response

Financial

Plan

Scenario

Analysis


Requires Critical Foundations

9



Successful adoption of IBP needs

discipline, simplicity and persistence

Measure: You need metrics of

both IBP adoption success and

metrics of supply chain

performance which frame the

decision making in IBP.

High quality team members:

Ensure project resources are the

best in their area, can perform as

change agents, help build

consensus, collaborate and are

prepared to lead new processes.

“Mastery” of master data:

Decision-support tools rely on

ERP/ transaction systems for data.

Don’t ignore, underestimate, or

fail to address gaps in the quality,

completeness, and governance of

your data assets.

Do what drives value: Guard

against “over-engineering” both

process and technology. The IBP

process is meant to be agile, not

bureaucratic. IBP tools need to evolve

at the pace of demonstrated utility

and applicability.

Tailored to essentials: Implement

S&OP/IBP so it addresses your

company’s key decision horizons and

frequency – not the textbook’s.

Build on the basics: IBP

complements core demand and

supply planning processes, it does not

replace them. Be sure that what

you’re pushing into IBP isn’t a

response to gaps in other core

processes.

Executive support:

Organizations often struggle with

new processes, requirements and

accountabilities—senior

management must visibly

champion the effort and reinforce

expectations.

No Big Bang: S&OP/IBP success

is an extended journey and you

need to understand your goals and

ensure they fit to your point in

that journey.

Come back from setbacks: IBP

disrupts many legacy assumptions,

agendas, and turf. Resistance is a

given. Work the obstacles and

opposers relentlessly. You have

right on your side.

Discipline Simplicity Persistence

910



In the past 10-15 years, most companies have

implemented ERP and/or Planning applications to

support the core planning processes

Typically, a combination of data from these tools,

reporting platforms, and MS Excel support S&OP/IBP

Enabling S&OP/IBP with Technology

Core Planning Modules

Demand

Planning

Inventory

OptimizationSupply Planning

Network

OptimizationOrder Promising

/ ATP

Finite Scheduling

S&OP/IBP Module

Collaboration

Dashboards &

Analytics

Financial

Analysis

Scenario

AnalysisNPI Planning

Excel-Like

Interface

This approach has several shortcomings including:

– Manual effort to support the process in Excel

– Lack of what-if scenario capabilities

– Limited collaboration capabilities

To overcome these challenges, companies seeking to

implement advanced IBP processes have implemented

S&OP or IBP technologies that build on the core

planning modules

1011



IBP Complements APO

Demand

and Supply

Review

Integrated Business Planning

Supply Chain Control Tower

Sales and Operations Planning

Demand Inventory Supply Response

The Focus is on:

S&OP+++

“What If” modeling / simulation

Aggregate planning

Collaboration

Visibility

Metrics management

The Focus is on:

Detailed Planning

Optimization

Integration with execution

Order Scheduling

Sales Order Product Availability

SAP APO

Supply Network Planning – APO SNP

Demand Planning– APO DP

Production Planning and Detailed Scheduling APO PP/DS

Demand Plan

Master Production Plan

Consensus

Demand

and Supply

Plan

Integration

Via Flat Files

OR

HCI - Hana

Cloud

Integration

Powered by SAP HANA™

1112



SAP IBP Components

Integrated Business Planning

Control Tower

Sales and Operations Planning

Demand Inventory Supply Response

SAP’s IBP Supply Chain Control Tower provides

end-to-end view of the supply chain with near real

time information and decision making analytics that

have drill down capabilities, custom scorecards and

dashboards with flexible exception management.

SAP’s IBP S&OP has the ability to match demand

and supply plans to financial objectives, profit

optimization and cost minimization by leveraging

scenarios and scenario comparison.

SAP’s IBP Supply is an extension to IBP S&OP that

develops a time phased constrained or unconstrained

multi level production plan using heuristics or

optimization with what If and scenario planning

capabilities.

SAP’s IBP Inventory application uses scenario and

what if analysis coupled with an advanced approach to

determine the ideal time phased inventory strategies

for FG, SFG and Raw materials and provide a network

wide view of inventory levels.

2015 2015

1213



IBP process enablement:

“What if” scenario modeling and simulation

Monetization of the planning process

IBP Process management metrics

Consensus building:

Visibility across the network

Enable organizational collaboration across brands, customers globally

Flexible dashboards

View one version of the truth

Change Management and Technology:

Simplify your SAP Solution

Move away from multiple offline spreadsheets

Straight forward to set up

Benefits of using SAP’s IBP solution

14



• What are your technology plans to

improve S&OP/IBP performance?

– Improve capabilities in core planning modules

– Implement an add-on S&OP/IBP platform

integrated with core planning tools

– Implement a stand-alone S&OP/IBP platform

– Enhance our Excel or reporting-based tools

Flash Poll

15



How to Get Started

2 - 4 weeks

Rapid Assessment

Current

State

Gather current state

data

Identify causes and

feasible solutions

Validate data

Diagnose

Analysis

Collaborate with internal team

to validate root cause

Capture Critical Requirements

and Targets

Analyze Issues and Bottlenecks

Future

State

Future state solution architecture

Key gaps

Implementation Roadmap

Document Purpose, Scope, Steps

14

3 Step Process

1. Understand / Identify Key Problems

2. Fit / Gap Analysis

3. Pilot

16



3 Step Process

1. Understand / Identify Key Problems

2. Fit / Gap Analysis

3. Pilot

How to Get Started

2 - 4 months

Pilot

Pilot

Design

Finalize scope (regional,

category / brand,

functional)

Requirements validation

Pilot Build, Test

and Train

Solution configuration

Data load and validation

Test and train

“Go Live”

1416



An Invitation to Self-Assess

Spinnaker S&OP/IBP Maturity Model

STAGE 1REACTING

STAGE 2ANTICIPATING

STAGE 3COLLABORATING

STAGE 4ORCHESTRATING

Demand

• Basic demand projections with no

alignment of marketing, finance,

and supply chain forecast

Demand

• Base and promo lift forecasted

separately

• Consensus demand aligned with

financial plan

Demand / Supply / Inventory

• Demand and supply aligned

• Multi-stage inventory planning

• Customer CPFR focused on sell-in

• Closed-loop supplier collaboration

Demand / Supply / Inventory

• Demand and supply plans aligned

internally and externally

• Multi-stage inventory planning

aligned with assortment and

merchandising processes

• End-to-end collaboration with sell-

through based forecast

• Advanced analytics developed for

custom business problems

Supply

• Locally managed supply plans

• No network-level constrained

supply plan

Supply

• Constrained supply plan aligned to

demand plan

• Single-site inventory planning

• Limited supplier collaboration

Finance

• After the fact reporting

Finance

• Clear budgets but difficult to

predict the future revenue, profit,

inventory

Finance

• Ability to align budgets and future

revenue, profit, and budget

projections

Finance

• Feedback loop to influence sales

and operational decisions, demand

shaping

S&OP Meetings

• Meeting focus is short-term and

historical

S&OP Meetings

• Meeting focus is short-term and

historical

S&OP Meetings

• Meeting focus is medium/ long-

term

• Policies to deal with most standard

situations developing

S&OP Meetings

• Defined policies address most

demand/supply decisions

• Focus is on exceptions and refining

standard policies

Process/Technology

• Multitude of spreadsheets

Process/Technology

• Standalone demand and supply

planning tools

• One-way systems interfaces

Process/Technology

• Integrated demand, supply, and

inventory planning tools

• Limited collaboration technology

• Closed loop interfaces

Process/Technology

• External-facing collaborative tools

integrated to internal demand-

supply-inventory planning systems

Where are you today? Where do you think your company needs to be?

1517



Spinnaker’s “5 Lenses” approach brings focus to the full range of perspectives

needed to significantly transform supply chain performance.

Spinnaker Services

That Support IBP Success

Our balanced approach helps client achieve profitable growth, optimize costs, and satisfy demanding customers.

People

• Organizational design,

training development, and

capabilities assessment

• Roles and responsibilities

design and process

mapping

• Change management and

transformation planning

Process

• Best practices assessment

• Root cause analysis of

performance gaps

• Process architecture and

re-engineering

• Value stream analysis and

process simplification

Technology

• SAP APO and IBP

blueprinting, design, and

implementation services

• Systems integration

• Master data assessment,

quality improvement, and

governance

• Data architecture and data

integration services

• Metrics and analytics

automation

Policies

• Supply chain business rule

analysis & definition

• Process impact analysis

• Monitors and compliance

controls definition

• Best practices analysis

Metrics

• Operational &

management metrics

definition

• Change management &

metrics of transformation

success and process

adoption

• Dashboards & analytics

• Industry norms/bests

Roadmapping, planning, & transformation management

1618



Questions

&

Answers

In Closing…

19



Contact Information

Dan LuttnerBusiness Development Manager

412.760.2750

[email protected]

David FosterSenior Manager

720.323.1984

[email protected]

Jay NearnbergSenior Manager

973.727.7174

[email protected]

integrated business planning (ibp): a tale of two perspectives

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