SAP SCM Transforming Supply Chains

SAP Innovations for

Demand Networks

Jesper Waaben
SCM Expert, SAP Center of Excellence EMEA
 The seven words
that have brought down more businesses than any others
“That’s not how we
normally do it”
© 2015 SAP SE or an SAP affiliate company. All rights reserved. Slide 2 Confidential 2
Digital Economy

World’s largest taxi company

owns no taxi’s

The Digital Disruption is

Largest accommodation provider
owns no real estate

Happening Largest phone company

owns no infrastructure

World’s most valuable retailer

owns no inventory

World’s largest movie house

owns no cinemas

Largest music company

owns no music

Worlds biggest book distributor

owns no books

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 3

Key Trends that revolutionize Supply Chain
Management in general
MOBILITY
• Smartphones outsell PCs.
• Today, mobile devices are the primary source to access Internet worldwide.

CLOUD COMPUTING
• Users can access systems regardless of their location or what device they use.
• More than one third of the software purchases by 2014 was via the Cloud.

SOCIAL NETWORKS
• There were 1.43 billion social network users in 2012.
• In 2012, 63.2% of the Internet users visited a social network at least once a month.

BIG DATA
• The data volume for the enterprise applications is doubling every 18 months.
• Internet traffic will quadruple by 2015, up to 966 exabytes.

INTERNET OF THINGS
• Supply chain visibility and automation remain key challenges within the next ten years.
• By 2020, there will be around 26 billion connected devices on the Internet of Things

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 4

 The seven Dimensions of SCM
The Seven Dimensions of SCM

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 5

Emerging Technologies

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 6

SAP SCM
Strategy & Outlook

© 2015 SAP SE. All rights reserved. 7

Driving Digital Transformation with SAP Extended Supply Chain

Mobile
Kiosks
Web Sites
Social Media

Personalized Products Retail Catalogs Customer Centricity

Lot Size 1 Production Omni Channel
Design – Plan – Respond – Produce – Deliver - Operate
3D Printing Network Response
Internet of Things
Predictive Maintenance Same Day Delivery
Project Product
Network Compliance

Strategic Asset
Sourcing Network
Response Logistics
Network Outsourced Network
Manufacturing

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 8

Our Solution Approach – Simplify the Increased Complexity

SAP Fiori on any device

Public cloud
Business Network

Design

Plan Operate
Managed
Extended cloud
Respond Deliver
Supply Chain
Produce
SAP S/4 HANA
On-premise
Connectors

Internet of Things

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 9

 Enabling Demand Networks

public cloud
Real-time Network Insights
managed cloud
Plan Respond Deliver

SAP Business Suite 4 HANA

SAP HANA Platform

on-premise

Plan Respond Deliver

 Sales, Inventory and Operations Planning  Response and Supply Management  Warehouse Management
 Demand Management  Production Planning and Scheduling  Transportation Management
 Demand Network  Response Network  Logistics Network

© 2015
2015 SAP
SAP SE
SE or
or an
an SAP
SAP affiliate
affiliatecompany.
company. All
All rights
rights reserved.
reserved. Internal 10
SAP Integrated Business Planning Solution
Speeding up the Supply Chain requires a new Supply Chain Planning approach

Mobile Enabled Experience

Introduce state-of-the art user experience with communication SAP Integrated Business Planning
capabilities (SAP JAM) and MS Excel Spreadsheets

Built on SAP HANA

Demand Networks require real-time monitoring and a focus
on short-term planning Enhanced User Experience

One Harmonized Data Model Supply Chain Control Tower

Avoid any latency due to integration efforts and leverage the
SAP ERP data model Sales & Operations Planning Inventory

New Planning Algorithms Response & Supply Demand

Leverage predictive analytics (e.g. demand sensing)
algorithm in combination with optimization SAP HANA Platform

Cloud First Approach

The solutions will be provided in the SAP Cloud but also be
made available on-premise
This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided
without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 11

Evolution of SAP IBP
2016+

Q4 2015
Today
2014

2013
IBP 6.0 IBP 7.0++
IBP 4.0 IBP 5.0
• IBP for Response • IBP embedded with
• IBP for Inventory • IBP for & Supply S/4HANA
2012 • Supply Chain Demand • Order-based data • Integration with
IBP 3.0 Control Tower • Further model financial planning
• IBP for Supply enhancements • Real time • Integration with
• New HANA Cloud to each
Integration model integration model Sales and Trade
Gartner MQ Leadership module Promotion Planning
IBP 2.0 • Integration content for
ECC, APO, EIS Quadrant
• IBP for sales & operations • Extended S&OP 90+ customers
• New cloud-based HANA platform Functionality
for advanced planning 75 customers
• New Excel and HTML User
Experience 30 customers
• Common architecture / data
This presentation and SAP‘s strategy and possible future developments are subject to change
model
and may be changed by SAP at any time for any reason without notice. This document is
• Support for internal collaboration provided without a warranty of any kind, either express or implied, including but not limited to,
the implied warranties of merchantability, fitness for a particular purpose, or non-infringement

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 12

 Integrated Business Planning for sales and operations
Customers and Industries
Consumer Chemicals
Products

Mill
Products &
Mining

Manufacturing
Pharma

High Tech

Services
Retail
© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 13
IBP Supply Chain Planning Solution Architecture

Benefits
• Flexible roadmap to leverage existing
Enhanced User Experience
implementations (i.e. APO) and adopt
Supply Chain Control Tower new innovations
Sales & Operations Planning Inventory
• Standard integrations with Business
Suite (ERP, APO, BPC…)
Response & Supply Demand
• Choice where to execute business
processes, and can evolve over time
• APO and IBP bring deep industry
APO Production APO Global
APO DP & Demand
Planning and
Detailed Scheduling
APO SNP
Signal Management
Available to
Promise
capabilities to maximize value delivery
SAP HANA Platform (ERP & other solutions)
now
• IBP and HANA enable evolution to next
Available, including IBP Supply for tactical and strategic planning generation real time supply chain
IBP Response & Supply for Order Based planning planned for Q4 2015
platform

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided
without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 14

 Supply Chain Excellence
SAP Integrated Business Planning

Jesper Waaben
Solution Principal SCM
September 2015 Center of Excellence, SAP EMEA
 IBP

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 16

SAP Integrated Business Planning
Speeding up the Supply Chain requires a new Supply Chain Planning approach

Enhanced User Experience

Introduce state-of-the art user experience with
communication capabilities (SAP JAM) and MS Excel
Spreadsheets

Built on SAP HANA

Demand Networks require real-time monitoring and a Enhanced User Experience
focus on short-term planning
Supply Chain Control Tower
One Harmonized Data Model
Avoid any latency due to integration efforts and leverage Sales & Operations Planning
the SAP ERP data model
Supply Inventory Response Demand
New Planning Algorithm
Leverage predictive analytics (e.g. demand sensing) SAP HANA Platform
algorithm in combination with optimization
SAP Business Network
Cloud First Approach
The solutions will be provided in the SAP Cloud but also be
made available on-premise
S&OP Customer Testimonial

“”Colgate Business Planning (CBP) is our integrated business planning process focused on
accelerating profitable growth. We have engaged with SAP as an co-innovation partner
and collaborator to utilize their S&OP tool to enable our integrated monthly CBP process
to synchronize demand and supply.

The S&OP capabilities on HANA include the real time simulation and analysis of demand
opportunities during planning sessions. The tool’s contextual social collaboration
capabilities have facilitated more timely communication and updates of demand changes Colgate-Palmolive is a leading global
across the organization. It has also streamlined the preparation and information exchange consumer products company, tightly
leading up to key consensus meetings by providing one tool and repository for
information.”
focused on Oral Care, Personal Care,
Home Care and Pet Nutrition. Colgate sells
Jim Davis
its products in over 223 countries and
territories around the world.
Global Director of Demand Planning and Customer Service

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 18

IBP Solution Architecture

SAP Integrated Business Planning 5.0

Excel
SAP HANA™
ERP Sales/

Web UI/https
Marketing
IBP Model & Engine
CRM Attributes
Key Figures
Demand
configured Integration

BPC Scenarios & Simulation Web

Out-of-the-box or

Planning
Predictive Analytics
Heuristics & Optimization
HCI

APO Process Management

Finance
Alerts
BW
Supply
Any other SAP Jam™ Chain
system Mobile
Social Collaboration
Files
Executives
The IBP Pillars
IBP: Plan in Real-time With a Unified Data Model

Capabilities:
 Plan in real-time, using a unified model of your demand,
supply chain and financial data within a single data
model, allowing planning on qty or value
 Analyze massive volumes of complex data instantly at
any level of granularity, aggregation, and dimension
 Import massive amounts of detailed data directly from
SAP and non-SAP sources

Benefits:
 Optimize product/customer profitability and product mix,
considering supply and financial constraints
 Adjust inventory levels to reduce cost, while meeting
target customer service levels
 Manage capacity utilization to avoid capacity and
material shortages
 Alert management User-defined process template

User-driven embedded analytics Value Qty

IBP: Run Simulations and Scenarios Instantly

Capabilities:
 Rapidly run simulations of demand, supply and
financial changes using your full data model to
support what-if analysis

 Compare planning scenarios and their impact on key

performance indicators in real-time

 Drill down into simulated data to perform detailed

analysis without the need for manual disaggregation

Benefits:
 Identify optimal set of tactics to drive revenue growth
and increase market share

 Uncover opportunities to reduce supply chain cost

 Prepare for potential changes in demand and supply

before they happen
 Select quantity or value Embedded alerts

Create own master data for simulation

Addresses NPI and invisible demand

Plan on select key figures Plan on select hierarchy level and disaggregate
IBP: Enable Rich, Contextual Social Collaboration

Capabilities:
 Track progress of your business process, including
assignment and monitoring of action items and the
stakeholders responsible

 Collaborate quickly and easily using embedded role

and context-aware social tools

 Plan using user-friendly web and Microsoft Excel

interfaces

Benefits:
 Increase speed and agility of planning

 Drive greater engagement and improve input from

users across your organization

 Improve precision of demand and supply balancing

 Collaborate and share analysis

Wealth of collaboration tools Messenger to key stakeholders

SAP Integrated Business Planning (IBP)

A
Supply Chain Control Tower

A
Sales and operations planning

A A A P
Demand Inventory Supply Response

A
SAP HANA

A Available

P Planned
SAP Integrated Business Planning (IBP)

A
Supply Chain Control Tower

A
Sales and operations planning

A A A P
Demand Inventory Supply & Response

A
SAP HANA

A Available

P Planned
 • Consider an airport control tower’s real time visibility of all airlines events in the region.
•
The air traffic controllers has all the relevant information presented to them in real time
SAP Supply Chain Control Tower
and are able to analyze, interpret and act on the information presented.
• They have a single interface to manage actions, corrective actions and communication
with stakeholders.
• Taking these lessons learned into supply chain planning… reacting to events in your
supply chain timeously helps to prevent losses and increase profit.
• SAP enables global visibility of the supply chain linked to sales, operations and
inventory planning in real time through the SAP Integration Business Planning solution
delivered in the SAP Managed Cloud

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 29

SAP Supply Chain Control Tower
Understand current supply chain status with flexible dashboards

Supply Chain Control Tower

Enable supply chain professionals to
Sales and operations planning
navigate, analyze and profitably manage
the end-to-end supply chain in real-time Demand Inventory Supply Response

• Increase end-to-end visibility SAP HANA

• Provides historical and forward looking

KPIs in a single view
• Drive visibility and action with user
configurable dashboards and analytics
• Monetized impact of exception conditions
 SAP SUPPLY CHAIN CONTROL TOWER
SAMPLE USE CASES

KPI dashboard Global visibility

Alerting to Action Task and Case management

SAP Integrated Business Planning for sales and operations

Deliver a cross departmental sales &

operations plan balancing the impact on Supply Chain Control Tower
inventory, service levels and profitability
Sales and operations planning
• Create the optimal business plan to drive
Demand Inventory Supply Response
revenue growth and increase market
share SAP HANA

• Effectively balance demand and supply

and attain financial targets
• Increase speed and agility of planning
and drive most profitable responses
• Improve forecast accuracy and on-time
delivery
SAP Integrated Business Planning for sales and operations

S&OP process management Simulation

Collaboration Dashboard analytics

Supporting different Business Models and Challenges
Net Business Impact

Value Proposition with S&OP powered by HANA Benefits

 Plan in real-time, using a unified model of your demand, supply chain and financial Optimize product/customer profitability
data and product mix
 Analyze massive volumes of complex data instantly at any level of granularity,
Real-time Planning aggregation, and dimension Single business plan for all
stakeholders
 Import massive amounts of detailed data directly from SAP and non-SAP sources
Avoid shortages
 Rapidly run “what-if” simulations of demand, supply and financial changes using
your full S&OP data model (30 to 40% improved response time)
Become prepared to seize opportunities
 Compare planning scenarios and their impact on key performance indicators in real-
Instant Simulations or deal with imminent threats
time
& Scenarios
 Drill down into simulated data to perform detailed analysis without the need for Lower safety buffers without raising risk
manual disaggregation

 Track progress of the S&OP process, including assignment and monitoring of action
items and the stakeholders responsible Improve forecast accuracy through a
faster and collaborative S&OP process
 Collaborate quickly and easily using embedded role and context-aware social tools
Social Collaboration
 Plan using user-friendly web and Microsoft Excel interfaces Greater accountability & adoption from
stakeholders
Net Business Impact

Value Proposition with S&OP powered by HANA Business Impact

• Standardize process with automated workflow and task management

1 Standardize
Process
• Enable collaboration with field providing ability for customer program managers to directly
input forecast data
• Integration and consolidated data provides single version of the truth
Participation
&
Accountability

• Optimize demand planning by leveraging historical data (previous forecast, actuals, etc.) and

2
Optimize
current backlog data Forecast
Demand
• View different demand inputs to create a single consensus
Accuracy (%)
Plan
• Run financial impact simulations, e.g. revenue impact based on supply plan

3
Balance
• Perform constraint based supply planning Inventory
Supply-
• Perform material and capacity analysis to balance supply-demand Costs
Demand

• Real-time refresh of data fields including: product family, part number, ASP, customer master,
form factor Time for Data

4
Real-time
• Run simulations in real-time to make better business decisions, faster Analysis
Data
• Paradigm shift from time spent on data gathering to data analysis to uncover opportunities vs.
Refresh
for improvement Gathering
Planning More Effectively with SAP® IBP for sales and
operations planning

Company Business challenges

SMART Modular Technologies Inc.  Planning processes that could not be scaled to keep up with fast company growth
Unified
Picture of sales, profits,
 Lack of capabilities to support a value-driven and profitability-oriented sales and and share targets, all in
Headquarters operations planning process that is linked to business strategy one system
Newark, California
Technical implementation
Industry
High tech
Implemented the SAP® Sales and Operations Planning application powered by the SAP
HANA® platform
Fast
Cycle times with fewer
Products and Services manual and labor-
Key benefits
Design, development, and deployment intensive sales and
 Standardized, optimized, and automated the sales and operations planning process, operations planning
of current and next-generation memory substantially reducing planning cycle times and workload processes
products
 Increased efficiency and accuracy of the forecasting process, and enabled the
identification of critical component shortages
Employees
1,400  Enabled integrated business planning Intuitive
User interfaces and
Web Site embedded collaboration
tools that help boost
www.smartm.com user productivity

Partner
Intrigo Systems “SAP Sales and Operations Planning powered by SAP HANA helps
www.intrigosys.com
SMART Modular manage our sales and operations planning in a
collaborative and efficient manner. We see a single version of the plan
from sales to planning to materials to the factory, all of which can be
correlated to financial performance. The result is true integrated business
planning.”
Srini Tanikella, Director IT Solutions, SMART Modular Technologies Inc.

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 37

There are two methods to get an accurate forecast

They are both wrong

SAP Integrated Business Planning for demand

Gain full Demand Transparency for short-,

mid- and long-term forecasting by Supply Chain Control Tower
leveraging demand sensing and statistical
Sales and operations planning
forecasting methods
Demand Inventory Supply Response
• Develop more accurate mid-term
statistical forecasts SAP HANA

• React faster to short term demand

changes with pattern recognition based
algorithms
• Drive more accurate deployment of
product based on short term demand
• Manage multiple demand signals
• Collaborate to ensure the most
accurate forecast
SAP Integrated Business Planning for demand
Demand Sensing Scenario planning for demand

Defining a forecast model Issue Resolution Fiori app

(great idea, though... let's talk about it in some year's time)
SAP Integrated Business Planning for inventory

Optimize multi stage Inventory Targets to

most efficiently meet or exceed customer
Supply Chain Control Tower
service levels, fully considering
uncertainties like forecast error and supply Sales and operations planning

uncertainty. Demand Inventory Supply Response

• Improve customer service levels SAP HANA

• Maximize the efficiency of inventory

and working capital
• Improve planner productivity,
standardize planning processes
• Standardize the inventory target-setting
process at each tier within the supply
chain to feed operational plans
• Determine right amount, right place,
and right time for inventory to carry
while meeting plan objectives
SAP Integrated Business Planning for inventory
Inventory positioning in network Inventory & Service optimization

Drivers of inventory ‘What if’ analysis on inventory

Mastering complex hub & spoke supply chain model with SAP® IBP
for sales and operations and SAP® EIS
Company Business challenges
McKesson Corporation  Spreadsheet-based planning approach prevented achieving aspired business growth Increased
targets User acceptance through
Headquarters  Limited to no possibility to gain insight / analyze vast amounts of relevant data on the centralized analytics and
San Francisco, CA, US required levels of granularity alerting
 Growing and enabling business organization quickly to fulfill growth targets
Industry
Pharmaceuticals Implementation

Products
 Integrated solution for sales & operations planning and inventory
optimization/replenishment planning
Decreased
Pharmaceuticals, Healthcare products, Working capital through
 SAP HCI pivotal piece of integrating IBP for s&o, EIS, ECC and BW optimized invetory targets
Medical technology  One Business Unit globally first, subsequent Roll-out and levels

Employees Key benefits

43,500  Improved confidence in and integrity of the S&OP process

Revenue
 Optimal inventory positioníng and level setting in complex supply chain environment Greater
 Simplification of planning and fully exception-based procedures enabled scaling up the Speed, efficiency and
US$ 122.455 billion business organization quickly effectiveness of planning
 Aggregation/disaggregation „on the fly“ through millions of relevant data records for process
Web Site rapid insight for business users
McKesson.com  Generation of optimal constrained and balanced business plan in line with corporate
financial targets
Partner
SAP Consulting

“Simplification of sales and operations planning, the introduction of an

optimized inventory positioning and replenishment process, and the
rapid enablement of the human organization was key for scaling up the
business according to the business growth targets.”
Jim Smith, Director of Solution Management, McKesson Corporation

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 44

SAP Integrated Business Planning for supply
Available now - will be upgraded to IBP for response and supply with IBP 6.0

Create tactical level supply planning

simulations for S&OP based on forecasts, Supply Chain Control Tower
orders, and inventory or safety stock
Sales and operations planning
targets.
Demand Inventory Supply Response

• Simulate either constrained or SAP HANA

unconstrained production and distribution

plan, using heuristics or optimization
based algorithms
• Multi level sourcing determination for
both distribution and Bills of Material
• Development of rough cut capacity plan
in a times series bucketed supply plan
• Gain visibility for projected stock or
shortages at relevant levels of
aggregation
 PLANNED Q4
(will supercede
SAP Integrated Business Planning for response and supply IBP for supply
in 6.0)

Fast, flexible supply planning supporting a variety of

approaches, suitable for many industries, including:
Supply Chain Control Tower
• Support of tactical (time-bucketed, rough cut) supply
planning in conjunction with IBP for sales and operation Sales and operations planning

Demand Inventory Supply Response

• Create specific orders for production and procurement
in short – mid term, in alignment with tactical plan SAP HANA

• Constrained optimization and priority rules-driven

algorithms. Unconstrained demand propagation and
heuristics options as well

• Make short-term supply adjustments

• What-if analysis of actual or hypothetical

changes to demand and / or supply

• Pegging and gating-factor analysis

• Optionally generate and provide allocations

to ATP, and reschedule sales orders
SAP Integrated Business Planning for supply&response
Entry screen – KPIs and alerts overview Back order processing and confirmation simulation

Stock projection Demand supply pegging analysis

SAP Integrated Business Planning for supply&response
Entry screen – KPIs and alerts overview

Stock projection Demand supply pegging analysis

SAP Integrated Business Planning for supply&response

Entry screen – KPIs and alerts overview

Stock projection Demand supply pegging analysis

Customers
 Integrated Business Planning for sales and operations
Customers and Industries
Consumer Chemicals
Products

Mill
Products &
Mining

Manufacturing
Pharma

High Tech

Services
Retail
 Thank you…

Jesper Waaben
Solution Principal SCM
Center of Excellence, SAP EMEA
Email: [email protected]
Telephone: +45 2923 3552

© 2015 SAP SE or an SAP affiliate company. All rights reserved.