Here is the third blog I promised on the IBP – Ariba SCC integration topic. As the first two were more technical, explaining the HOW, in this post, I will provide an end to end example that will help to answer the WHY.
Preventing or mitigating supply chain disruptions requires companies to gain visibility not only over their own operations but also across suppliers. But this state is difficult to achieve as the information is fragmented, sometimes within the organization itself, with high variation in data type and format. The ability to go beyond the organization’s borders is highly dependent on two aspects: processes and the adoption of the right technology. The technology must enable collaborative processes across the organization and with the trading partners, with the aim to reduce risks and improve performance.
Let’s have an example and see how with IBP and Ariba SCC companies have the chance to transform themselves into extended enterprises where suppliers are tightly integrated.
From operational to tactical and strategical, there are many business use cases I could choose from to showcase the benefits of the tight integration between IBP and Ariba SCC. I will use the day-to-day situation of managing demand and supply fluctuations and for this, we start from the premise of having a product for which the latest demand projection indicates a significant increase over the next months.
The supply planner has to determine how to fulfil the extra demand, if possible at all. Using IBP’s time series planning operator, in a matter of minutes, the latest demand projection is carried throughout the entire supply chain network allowing the planner to evaluate the impact at different levels like resource production capacity or components consumption.
Without emails and phone calls, the supply planner can share the new components’ forecast with the suppliers by running the corresponding data sharing arrangements.
Logging into Ariba SCC planning portal, the supplier can immediately review how the forecast has changed since the last received plan. Is he able to meet this extra demand? Most likely not entirely as he is also encountering some production challenges. The supplier updates the commitments plan and sends it back to the customer.
Integration of the supplier commits to Time-Series-Based: Supply Planning Optimizer
Once the commitment is integrated back to IBP, the supply planner is alerted about the possible disruption. With the help of analytics, he can easily go to the root and identify the problematic component.To realize the impact of the component constraint on higher level demand, the supply planner will run the time-series optimizer operator*. This way, the supply planner can check what is the total customer demand that cannot be fulfilled and work toward alternative plans.
*To use the supplier commit as a constraint in the optimizer, I defaulted the Maximum Transport Supply to the Supplier Commit key figure.
Integration of the supplier commits to Order Based Planning: Constrained Forecast Run
Depending on the use case, another way of consuming the supplier commitments is by executing a Constrained Forecast Run, operator available with IBP Response. The outcome of this run will enable the planner to determine the ability to fulfil the forecasted demand and derive allocations based on rules and prioritizations.
Are there any constraints that prevent the plan fulfilment? The supply planner has multiple ways to visualize the exception situations: planning views, alerts’ monitoring or gating factors. In this example, as expected, the component under-commitment coming from the supplier is generating a supplier constraint gating factor highlighted in the order network.
Further, to close the loop, if the constrained plan suits the planner’s requirements, the planner can trigger the confirmation run to confirm the sales orders based on the product allocation and stock supply quantities.
- Faster response to demand changes or supply shortages, resulting in supply chain lead time reduction
- Improved accuracy via end-to-end collaboration, manage complexity through transparency
- Improved customer service through responsive supply chain planning
- Supply chain costs reduction by avoiding costly fire-fighting
That’s it! I hope that you found this mini-series useful for your future implementation projects.
All the best,