Single Planning Area vs Multiple Planning Areas
Which option is the best fit for you?
When you start the implementation project for SAP Integrated Business Planning for Supply Chain (IBP), one of the key decisions you need to make might be how you define the planning area. A planning area is a unified structure in which planning and analytics processes are performed in SAP IBP. It holds the entire set of master data, time periods, associated attributes, planning levels and key figures. Some companies may choose to have one single global planning area to have visibility of the supply chain network across all over the world. Other companies may choose multiple planning area strategy divided for example, by region (Americas, EMEA, APJ) or business (consumer electronics, video games) or type of planning (Demand Planning, Supply Planning). The decision is made depending on their supply chain model and preference. There is no always-100%-right answer except a very few technical limitations that SAP currently has. In this blog post, I would like to list up what should be kept in mind to make the decision.
Technical Recommendation as of SAP IBP Version 2005
It is recommended to have own planning area for order-series (response – sample planning area SAP7), shelf life (sample planning area SAP4S) and demand-driven replenishment (sample planning area SAP8). They are not part of the unified sample planning area SAPIBP1. At least, they are not available out of the box in the unified planning area. In other words, since SAP IBP has flexibility in supporting the planning at different time granularity and different hierarchy, except the exceptional cases (order-series, shelf-life, demand driven replenishment), there is no functional reason to have multiple planning areas.
Pros and Cons
In general, it is recommended to have a smaller number of planning areas. Fewer planning areas can result in better system maintenance and better system performance. It is because of, for example, a smaller number of integration jobs. Each planning area will require its own master data and key figure data.
On the other hand, multiple planning areas can provide flexibility in operation. Even if one planning area needs downtime, for example, for new functionality introduction or system issue that affects planning area overall, other planning areas can be continued to be operated. Also, the standard copy/disagg. operator allows us to copy data between planning areas.
If the supply chain model is independent, for example, within specific region or country, you don’t necessarily need to have all the processes in one planning area. But in case the supply model is connected globally (for example, inter-regional transportation lanes), putting the process of the model into one planning area can be appropriate choice.
In this blog post, I listed up what we should keep in mind to make the decision about planning area definition in terms of single planning area vs multiple planning areas. I hope you will find the information useful when you make the decision.