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Author's profile photo Masao Shimizu

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.

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Conclusion

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.

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      6 Comments
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      Author's profile photo Rett Bryson
      Rett Bryson

      thanks for the post Masao.  There is limited documentation on the shelf life planning area.  What is the recommendation if an implementation currently have S&OP (supply heuristic).  The implementation is based on UNIPA however since in the future they will expand into demand and IO.  Why not bring shelf life into the UNIPA?

      Author's profile photo Irmhild Kuntze
      Irmhild Kuntze

      Hi Rett

      Shelf Life is not relevant for all customers, but it is specific use case for e.g. consumer or pharma industry. It brings extra key field of the shelf life into the system, which is a big additional load. There it is not advisable to have that in UNIPA in the first place as most customer would not need it.

      You would need to model that yourself into your copy of UNIPA

      Cheers, Irmi

      Author's profile photo Masao Shimizu
      Masao Shimizu
      Blog Post Author

      Hi Irmi,

      Thank you for providing the reply to the question from Rett.

      Hi Rett,

      As far as I know, no plan to merge shelf-life functionality into IBP1 template. My understanding is general recommendation would be to have separated planning area for shelf-life. As Irmi mentioned, you can try to merge the configuration into your unified planning area, but you need to test the behavior on your own.

      Best regards, Masao

      Author's profile photo Ajay Kanaparthi
      Ajay Kanaparthi

      Hi Massao and thanks for the post. We have implemented SAPIBP1 to run S&OP for the mid term planning in weekly buckets. Now it is required to plan the annual budget plan in monthly buckets for the same planning level. It is required the keep data frozen for future reference, it should not impact the mid term planning results (vice versa) and it should not impact the mid term planning performance. Should we create a new Planning Area or new Planning Versions for this annual budget planning? Thanks!

      Author's profile photo Masao Shimizu
      Masao Shimizu
      Blog Post Author

      Hi Ajay,

      Thanks for checking the blog and providing the comment. I would recommend trying new planning version first rather than new planning area and check it meets requirements. You mentioned you use weekly bucket for the mid-term planning. I assume in the time profile, you have at least technical week as the lowest level of granularity so that you can have monthly bucket in the same planning area.

      Author's profile photo Masao Shimizu
      Masao Shimizu
      Blog Post Author

      Additional comment: Also, you have an option to have version dependent master data for the planning version for the annual budget plan.