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By Guido Kaup

For years, SAP Advanced Planning and Optimization has been a powerhouse solution for SAP customers managing complex supply chains. It still is, in fact. But as companies ramp up for digital transformation, many companies are wondering what’s new and different with APO in the context of SAP S/4HANA.

SAP S/4HANA, of course, is our next generation ERP suite, specifically designed to help customers succeed in their digital transformation initiatives. Representing a dramatic revision of the SAP codebase, SAP S/4HANA is optimized for the cloud. It’s flexible and agile to facilitate rapid business expansion. And it gives you a digital core that can help you take advantage of emerging technologies in creative new ways.

As the name suggests, it’s also based on the SAP HANA platform – with its in-memory computing database that combines lightning-fast transaction processing speeds with real-time analytical insight. SAP S/4HANA also includes SAP Cloud Platform to help you build, deploy, and innovate with greater speed and ease.

But back to the main concern: what’s new and different with APO in the context of SAP S/4HANA? Here’s a quick run-down:

 

Some APO planning functionality has moved to SAP S/4HANA itself

Part of the goal here is to help move companies away from integrated ‘add-on’ planning solutions (SAP APO or 3rd party solutions) and toward a more centralized single source of truth to support real-time sense and respond supply chain processes. This can help you eliminate data duplication, reduce cost, and increase ease of use.

Here’s what’s moved to SAP S/4HANA:

  • Material resource planning (MRP): Now you can run “live MRP” with accelerated and simplified planning processes and data. With fast material and supply planning, runs that used to take hours are reduced to minutes – enabling you to reduce reliance on overnight batch processes before responding to supply disruptions.
  • Production Planning and Detailed Scheduling: Constraint-based capacity planning is now embedded in a single SAP S/4HANA MRP process that manages capacity constraints and detailed scheduling rules. New planning boards and decision-support tools help you evaluate plans and make faster, better decisions for improved service levels and greater responsiveness.
  • Global available to promise (gATP): SAP S/4HANA includes some of the gATP capabilities from SAP APO – but adds new capabilities as well. For example, with advanced allocation management you can now reach across multiple channels and customer hierarchiesfor better informed  real-time order promising. And with flexible rules, you can define demand priorities to automate supply allocation and even enable interactive reallocation. This helps to ensure that your most important channels and customers are serviced when supply is short.

 

Some APO planning functionality has moved to SAP Integrated Business Planning 

Other APO functionality has moved to the new SAP Integrated Business Planning solution, which is natively built and optimized for SAP S/4HANA.

This new solution offers state-of-the-art business processes with a highly flexible Fiori-based UI and centralized data that lives on a single SAP HANA database. It also features planning books that use a Microsoft Excel spreadsheet interface – which is understood inside and out by planners everywhere. This approach delivers the familiarity you need to drive adoption without the drawbacks of multiple spreadsheets and competing versions of the truth.

Designed for the cloud, SAP Integrated Business Planning also facilitates faster ramp-up, lower total cost of ownership, and better collaboration. Planning processes are connected and integrated with end-to-end visibility at the strategic, tactical, and operational levels. Scalable and intuitive for non-expert users, it also supports real-time what-if scenario planning, collaboration across the planning team, and the ability to run with any ERP system – not just SAP.

SAP Integrated Business Planning: A flexible, intuitive Fiori-based UI

 

Here’s a high-level view of what’s moved over:

  • SAP Integrated Business Planning for demand: Develop accurate statistical forecasts, react to short-term demand changes with pattern recognition, deploy products based on short term demand, and collaborate to ensure the most accurate forecast
  • SAP Integrated Business Planning for inventory: Improve customer service, optimize working capital, maximize inventory efficiency, improve productivity with standardized planning processes, and reduce production and distribution costs[1]
  • SAP Integrated Business Planning for response and supply: Quickly adapt to changes in demand by building tactical and operational supply plans in constrained or unconstrained mode, running simulations to optimize decisions, generating allocations to ATP, and rescheduling sales orders on the fly

In addition to optimized functionality ported over from APO, SAP Integrated Business Planning also incorporates two newly developed components. These include:

  • SAP Integrated Business Planning for sales and operations: Optimize plans to drive revenue growth and increase market share, balance demand and supply, and speed the planning and forecasting process for on-time delivery
  • Supply Chain Control Tower: Achieve end-to-end visibility and decision support in the extended supply chain,  Increase on-time delivery, minimize inventory levels, and maximize supply chain agility while minimizing cost and risk

At-a-glance: New Integrated Business Planning functionality for digital transformation

 

Who’s made the move already?

If you’re considering moving to SAP S/4HANA and SAP Integrated Business Planning, you won’t be alone. Already, SAP customers are seizing the advantage of it’s speed, agility, and visibility. Here’s some examples:

  • Microsoft uses the solution as a fully integrated end-to-end corporate platform for consensus demand planning – with standardized processes, collaboration, and statistical forecasting (See the video here)
  • Corning uses it to reduce inventory levels through better planning, minimize freight costs through a weekly demand and supply response process, and improve forecast accuracy through statistical modeling and de-biasing techniques
  • Colgate-Palmolive uses it to increase planning agility, confidently meet sales commitments, improve decision-making, and dramatically cut planning cycle times

For more customer case studies, read my latest blog here.

 

Download the new SAP Digital Supply Chain Special Report and see how SAP S/4HANA enables companies to integrate, embed intelligence, and visualize all supply chain processes from supplier to customer.

 

Watch now to hear Microsoft’s CTO and hardware supply chain executives explain how they are using and benefitting from the SAP Integrated Business Planning solution:

Microsoft Discussing the Benefits of SAP Integrated Business Planning Solutions

[1] This functionality was moved over from SAP Enterprise Inventory and Service-Level Optimization
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5 Comments

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  1. Raymond Adams

     

    Great summary Guido.  We are trying to summarize this from an industry perspective for chemicals – we have had good adoption, but still many customers are asking the APO to IBP question.  More to follow!

     

    Ray Adams, IBU Chemicals

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  2. Ian Brister

    Nice article Guido. If only SAP could adjust the subscription model structure/offering, then I’m pretty sure more companies would be considering moving from APO as the power of SAP IBP is phenomenal.

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  3. Anna Waje

    Hi  Guido,

    Good High Level insight.  Definitely a positive when we compare this with UI/ Simplicity & flexibility of planner to use this and improve faster decision making.

    As many organization runs APO successfully , it’s hard to create and own the business case to implement IBP over Exiting APO ( Beside IBP- S&OP Module) .   It’s parallel investment beside APO as for many functionality  of IBP yet to get Maturity  to complete the process oriented solution .  As we are moving away from CIF technology to HCI/SDI- there is definitely shift from “Real Time” to “Near Real Time” Scenario.

    Response is  yet to capture CTM capabilities. as mentioned by Ian in his response , the adoption will increase  if IBP PHASE IN & APO PHASE OUT are synchronized with proper alignment which respect to Business Processed mapped in APO and IBP offering .

    As APO exists from 2-3 decades , many business specific scenario are build on APO which are not available in standard , so how will be  IBP taking care of this ( being cloud offering ) or customer has to comprise on same

    Anna Waje

     

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  4. Bhavesh J Shah

    Great article Giudo!  SAP IBP is sure to be the future with technological innovations & digitisation.  If the pricing for demo/live access can be adjusted / offered differently (either by reducing the number of users – currently 10), it would be helpful for small companies to subscribe & explore the new functionalities of SAP IBP and know the power of new technology.

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  5. Peter Bickenbach

    Good article, Guido.

    Challenging is the explanation of what  parts from APO “surviving” in S/4HANA (PP/DS & (G)ATP) to synchronize with the new IBP, especially with RESPONDS-Part. There are two world of ATP`s and different timelines.

    In addition the DDMRP piece in S/4HANA enhanced with IBP Demand, Inventory and S/4HANAs PP/DS…

     

    Peter Bickenbach, BlackBelt SCM, MEE

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