To everything, turn, turn, turn, there is a season…
When I started out in planning and forecasting, there were no integrated systems. We built production schedules for the next week or two based on recent sales and open orders. We knew there were certain products that sold well at certain times of the year (ice cream cones in summer, saltines in the winter). We built inventory for these products based on last year’s sales and this years’ projections. And we did it all in spreadsheets. As we moved to more sophisticated systems, users had less flexibility to quickly adapt to changing requirements. Now the pendulum is swinging back to user flexibility.
Excel Spreadsheets
Excel was new when I started out. We learned how to use it to create customized new formats. As new requirements came up in the planning process, we could adapt the spreadsheets co calculate whatever we needed (assuming we could get the necessary data). We worked hard to create a feasible schedule that met all the estimated demand. No one ever claimed it was the optimal schedule, just one feasible way of meeting demand.
Manugistics Fulfillment
Then I helped my company transition to Manugistics for supply planning. Now we had to standardize interfaces and data flow, but we still had flexibility to create our own desktops, userviews, and data selections as business needs changed. Manu also had a nifty way to quickly adjust for weeks that were over capacity by pre-building inventory or shifting production to alternate lines. But it still was not an optimal schedule, just one feasible way of meeting demand.
SAP APO
Then we moved to APO. Now the planning books were pre-designed. Only I.T. could change them. We users could still create our own data selections, but modifying planning books required a major I.T. project. We adapted to new business requirements by copying data out of APO and working in spreadsheets again.
Everything old is new again
SAP IBP
Now I’m working with SAP IBP. Users can create and modify their own planning views in Excel. Users can create their own dashboards and charts in the web UI. Once again, we can adapt to changing business requirements without a major I.T. project.
But IBP is far better than individual spreadsheets because it integrates all the aspects of Sales & Operations Planning in one unified planning area. Now everyone can be working off the same data, at the same time, in the same system. No more waiting for tomorrow or next week for supplier planners to see, and react to, a change in demand forecasts. Now Demand Planners can setup a scenario for a potential change and supply planners can immediately determine the impact to capacity utilization and inventory requirements.
Optimizer
IBP also includes a very useful optimizer. Back when we were first planning production in Excel spreadsheets, I used Excel’s linear programming to help determine optimal sourcing between multiple production locations. I had to work at a very high level to stay within capabilities of Excel, and running through multiple scenarios took a long time. By the time I had a solution, the world had often moved on already.
Now the IBP optimizer can quickly analyze cost tradeoffs at a detailed level to come to the least-cost solution. Alternate production sources, alternate transportation lanes, pre-building of inventory, make vs. buy – all these can be modeled at SKU level using real cost data. Optimizer calculates the least cost solution for each scenario. Alternate scenarios can quickly be evaluated and put in front of key decision makers for timely response.
I’ll see you in IBP
There may be better tools in specific applications (such as statistical forecasting), but IBP is catching up rapidly. More importantly, the benefits of a unified planning area and the optimizer make IBP worthy of your consideration next time you are changing or upgrading planning systems.
Oh, one more thing. In about 8 years, SAP is going to stop general support for APO. So, if you are currently using APO, I’ll probably see you in IBP sooner or later.
For a more detailed view of IBP’s capabilities, read this: https://www.sap.com/products/integrated-business-planning.html
e same time? In the same system?