Integrated Business Planning (IBP): A Tale of Two Perspectives

Spinnaker Proprietary & Confidential 2014
All Rights Reserved 0
Integrated Business Planning (IBP):
ATale ofTwo Perspectives
December 9th
12:15PM – 1:00PM EST

Founded in 2002 as a Supply Chain Planning consulting firm,
Spinnaker Management Group has become a holding company for several brands.
350+ resources
200+ clients globally
Spinnaker Overview
ERP & CRM
Maintenance
HQ Denver
Supply Chain
Services
HQ Houston
Technology
Staffing Services
HQ Pittsburgh

Introductions
David Foster
Senior Manager
• An SAP-focused supply chain
functional consultant with over 25
years of industry and IT
experience
• Experience with hands-on cross
module requirement analysis,
design/development, configuration
• Implementation experience in SAP
IBP/S&OP,APO
DP/SNP/PPDS/TPVS/Alert Monitor,
and ECC/MM/PP as well as
SAP/BW
Jay Nearnberg
Senior Manager
• A supply chain professional with
over 30 years of industry and
consulting experience
• Experience driving supply chain
transformations/improvements,
including organizational
development, process
reengineering, and systems
implementation
• Specialty in S&OP, planning,
logistics, metrics, and inventory
management

Goals ForThe Session
1. Clarify understanding of what Integrated Business Planning (IBP) is, both
from a process and from a technology point view
2. Share Spinnaker’s Point Of View on IBP
– Typical performance gaps and what’s behind them
– Our framework for IBP and its role in improving performance
3. Review Integrated Business Planning from SAP
– Advanced Planning tools and IBP – How do they work together?
– What is SAP’s IBP suite?
– Where do you start?
4. Describe Spinnaker services that help our clients achieve successful IBP
implementations

Integrated Business Planning (IBP) –
One Acronym,Two Definitions
Process-Focused Definition:
IBP is typically used to refer to highly mature (Stage 3-4) Sales & Operations Planning (S&OP)
processes.At this point companies effectively synchronize the overall company and extended
planning process intended to align financial, supply chain, and go-to-market business decisions.
SAP’s Software Definition:
SAP Integrated Business Planning is a suite of planning applications focused on S&OP, Demand,
Supply, and Inventory Planning that provides essential technology support for achieving advanced
IBP capabilities.
S&OP/IBP Maturity Model
STAGE 1
REACTING
STAGE 2
ANTICIPATING
STAGE 3
COLLABORATING
STAGE 4
ORCHESTRATING
Development of an
operational plan
Demand and supply
matching
Internal cross-
functional
collaboration and
profitability focus
Extended supply chain
collaboration and
financial optimization
S&OP/IBP
Strategy
Goals

 Customer service levels are unacceptable – deliveries take too long or are incomplete,
promise dates constantly slip, and information is inaccurate
 Sales falling short of plan, with repeated cycles of finger pointing over who’s responsible
for the gap and lots of wasted effort on fire drills
 Mismatch of supply and demand cause shortages of some products while others are
“pushed” at quarter end to make the number
 Sales, Marketing, Finance and Supply Chain functions seem to be operating to different
numbers “We spend a lot of time reconciling different views of what ‘demand’ will be”
 New product rollouts never seem to be able to launch and ramp with predictability
 We keep creating excess / obsolete inventory across the network while simultaneously
experiencing shortages
 “Our Excel-based process won’t scale, doesn’t align with real world demand or supply,
and doesn’t allow us to evaluate alternatives”
Typical Business Performance Gaps
Driving S&OP/IBP Implementations

Understanding the Root Causes
of Performance Gaps
 Lack of accurate sales input to demand and supply planning
 Poor recognition of marketing intelligence and sales
 Missed sales opportunities
 Excess inventory required to cover lack of visibility
(volatility) to near-term demand
 Poor service and “whipsaw” responses to shortages
 “Blanket” or “rule of thumb” inventory levels leave many
items with excesses or shortages
 Simultaneous service issues and excess inventory
 Excel falls short of S&OP process requirements
 Existing planning tools aren’t designed for flexible scenario
analysis
Performance Gaps
 Ineffective collaboration processes and tools lead to
consistent capture of actionable sales intelligence and
disorganized demand planning & consensus
 Highly manual and disconnected planning processes
(e.g., financial targets not aligned with supply chain)
 Poor policy alignment across inventory goals, financial
objectives, and customer service targets
 “Top-down” forecast mandates with consequent
amplification of error vs. true demand
 Lack of analytical capabilities supporting the demand
planning process
 Lack of analysis and reporting tools to support the
business requirements
 Lack of training and resources to effectively maintain
models and data
Root Cause
 Low forecast accuracy at multiple levels
 Lack of confidence in forecast by supply planners leads to
discounting / ignoring of forecasts in favor of history

• What is the biggest challenge preventing your
organization from achieving advanced IBP performance?
– Disconnected planning processes
– Ineffective collaboration processes and tools
– Poor policy alignment
– Lack of analytical capabilities and reporting tools
– Lack of training
Flash Poll

• Spinnaker bases our IBP designs on a proven best-practices framework that separates
IBP activities into Demand, Supply, and IBP processes
• This framework outlines an integrated Demand, Supply, and IBP process.
Spinnaker’s Structured S&OP Approach
S&OP CycleSUPPLYDEMAND
Consensus
Demand
Planning
Closed-Loop S&OP
Financial
Analysis
Executive
Review
Demand-
Supply
Balancing
Forecasting
Analytics
Consensus
Demand
Independent
Forecasting &
Customer
Collaboration
Constrained
Supply
Planning
Inventory
Planning
Supplier
Collaboration
& Commits
Supply
Response
Financial
Plan
Scenario
Analysis
Spinnaker’s IBP Process Framework

Consensus
Demand
Planning
Demand-
Supply
Balancing
Constrained
Supply
Planning

Consensus
Demand
Planning
Closed-Loop S&OP
Executive
Review
Demand-
Supply
Balancing
Consensus
Demand
Constrained
Supply
Planning
Supply
Response
Financial
Plan

Consensus
Demand
Planning
Closed-Loop S&OP
Executive
Review
Demand-
Supply
Balancing
Forecasting
Analytics
Consensus
Demand
Constrained
Supply
Planning
Inventory
Planning Supply
Response
Financial
Plan

Consensus
Demand
Planning
Closed-Loop S&OP
Executive
Review
Demand-
Supply
Balancing
Forecasting
Analytics
Consensus
Demand
Independent
Forecasting &
Customer
Collaboration
Constrained
Supply
Planning
Inventory
Planning
Supplier
Collaboration
& Commits
Supply
Response
Financial
Plan

Consensus
Demand
Planning
Closed-Loop S&OP
Financial
Analysis
Executive
Review
Demand-
Supply
Balancing
Forecasting
Analytics
Consensus
Demand
Independent
Forecasting &
Customer
Collaboration
Constrained
Supply
Planning
Inventory
Planning
Supplier
Collaboration
& Commits
Supply
Response
Financial
Plan
Scenario
Analysis

Consensus
Demand
Planning
Closed-Loop S&OP
Financial
Analysis
Executive
Review
Demand-
Supply
Balancing
Forecasting
Analytics
Consensus
Demand
Independent
Forecasting &
Customer
Collaboration
Constrained
Supply
Planning
Inventory
Planning
Supplier
Collaboration
& Commits
Supply
Response
Financial
Plan
Scenario
Analysis
Requires Critical Foundations
9

Successful adoption of IBP needs
discipline, simplicity and persistence
Measure: You need metrics of
both IBP adoption success and
metrics of supply chain
performance which frame the
decision making in IBP.
High quality team members:
Ensure project resources are the
best in their area, can perform as
change agents, help build
consensus, collaborate and are
prepared to lead new processes.
“Mastery” of master data:
Decision-support tools rely on
ERP/ transaction systems for data.
Don’t ignore, underestimate, or
fail to address gaps in the quality,
completeness, and governance of
your data assets.
Do what drives value: Guard
against “over-engineering” both
process and technology.The IBP
process is meant to be agile, not
bureaucratic. IBP tools need to evolve
at the pace of demonstrated utility
and applicability.
Tailored to essentials:Implement
S&OP/IBP so it addresses your
company’s key decision horizons and
frequency – not the textbook’s.
Build on the basics: IBP
complements core demand and
supply planning processes, it does not
replace them. Be sure that what
you’re pushing into IBP isn’t a
response to gaps in other core
processes.
Executive support:
Organizations often struggle with
new processes, requirements and
accountabilities—senior
management must visibly
champion the effort and reinforce
expectations.
No Big Bang: S&OP/IBP success
is an extended journey and you
need to understand your goals and
ensure they fit to your point in
that journey.
Come back from setbacks: IBP
disrupts many legacy assumptions,
agendas, and turf. Resistance is a
given.Work the obstacles and
opposers relentlessly.You have
right on your side.
Discipline Simplicity Persistence
910

 In the past 10-15 years, most companies have
implemented ERP and/or Planning applications to
support the core planning processes
 Typically, a combination of data from these tools,
reporting platforms, and MS Excel support S&OP/IBP
Enabling S&OP/IBP withTechnology
Core Planning Modules
Demand
Planning
Inventory
Optimization
Supply Planning
Network
Optimization
Order Promising
/ ATP
Finite Scheduling
S&OP/IBP Module
Collaboration
Dashboards &
Analytics
Financial
Analysis
Scenario
Analysis
NPI Planning
Excel-Like
Interface
 This approach has several shortcomings including:
– Manual effort to support the process in Excel
– Lack of what-if scenario capabilities
– Limited collaboration capabilities
 To overcome these challenges, companies seeking to
implement advanced IBP processes have implemented
S&OP or IBP technologies that build on the core
planning modules
1011

IBP Complements APO
Demand
and Supply
Review
Integrated Business Planning
Supply Chain Control Tower
Sales and Operations Planning
Demand Inventory Supply Response
The Focus is on:
 S&OP+++
 “What If” modeling / simulation
 Aggregate planning
 Collaboration
 Visibility
 Metrics management
The Focus is on:
 Detailed Planning
 Optimization
 Integration with execution
 Order Scheduling
 Sales Order Product Availability
SAP APO
Supply Network Planning – APO SNP
Demand Planning– APO DP
Production Planning and Detailed
Scheduling APO PP/DS
Demand
Plan
Master
Production
Plan
Consensus
Demand
and Supply
Plan
Integration
Via Flat Files
OR
HCI - Hana
Cloud
Integration
Powered by SAP HANA™
1112

SAP IBP Components
Integrated Business Planning
Control Tower
Sales and Operations Planning
Demand Inventory Supply Response
SAP’s IBP Supply Chain ControlTower provides
end-to-end view of the supply chain with near real
time information and decision making analytics that
have drill down capabilities, custom scorecards and
dashboards with flexible exception management.
SAP’s IBP S&OP has the ability to match demand
and supply plans to financial objectives, profit
optimization and cost minimization by leveraging
scenarios and scenario comparison.
SAP’s IBP Supply is an extension to IBP S&OP that
develops a time phased constrained or unconstrained
multi level production plan using heuristics or
optimization with what If and scenario planning
capabilities.
SAP’s IBP Inventory application uses scenario and
what if analysis coupled with an advanced approach to
determine the ideal time phased inventory strategies
for FG, SFG and Raw materials and provide a network
wide view of inventory levels.
2015 2015
1213

IBP process enablement:
 “What if” scenario modeling and simulation
 Monetization of the planning process
 IBP Process management metrics
Consensus building:
 Visibility across the network
 Enable organizational collaboration across brands, customers globally
 Flexible dashboards
 View one version of the truth
Change Management andTechnology:
 Simplify your SAP Solution
 Move away from multiple offline spreadsheets
 Straight forward to set up
Benefits of using SAP’s IBP solution
14

• What are your technology plans to
improve S&OP/IBP performance?
– Improve capabilities in core planning modules
– Implement an add-on S&OP/IBP platform
integrated with core planning tools
– Implement a stand-alone S&OP/IBP platform
– Enhance our Excel or reporting-based tools
Flash Poll
15

How to Get Started
2 - 4 weeks
Rapid Assessment
Current
State
 Gather current state
data
 Identify causes and
feasible solutions
 Validate data
Diagnose
Analysis
 Collaborate with internal team
to validate root cause
 Capture Critical Requirements
and Targets
 Analyze Issues and Bottlenecks
Future
State
 Future state solution architecture
 Key gaps
 Implementation Roadmap
 Document Purpose, Scope, Steps
14
3 Step Process
1. Understand / Identify Key Problems
2. Fit / Gap Analysis
3. Pilot
16

3 Step Process
1. Understand / Identify Key Problems
2. Fit / Gap Analysis
3. Pilot
How to Get Started
2 - 4 months
Pilot
Pilot
Design
 Finalize scope (regional,
category / brand,
functional)
 Requirements validation
Pilot Build,Test
andTrain
 Solution configuration
 Data load and validation
 Test and train
 “Go Live”
1416

An Invitation to Self-Assess
Spinnaker S&OP/IBP Maturity Model
STAGE 1
REACTING
STAGE 2
ANTICIPATING
STAGE 3
COLLABORATING
STAGE 4
ORCHESTRATING
Demand
• Basic demand projections with no
alignment of marketing, finance,
and supply chain forecast
Demand
• Base and promo lift forecasted
separately
• Consensus demand aligned with
financial plan
Demand / Supply / Inventory
• Demand and supply aligned
• Multi-stage inventory planning
• Customer CPFR focused on sell-in
• Closed-loop supplier collaboration
Demand / Supply / Inventory
• Demand and supply plans aligned
internally and externally
• Multi-stage inventory planning
aligned with assortment and
merchandising processes
• End-to-end collaboration with sell-
through based forecast
• Advanced analytics developed for
custom business problems
Supply
• Locally managed supply plans
• No network-level constrained
supply plan
Supply
• Constrained supply plan aligned to
demand plan
• Single-site inventory planning
• Limited supplier collaboration
Finance
• After the fact reporting
Finance
• Clear budgets but difficult to
predict the future revenue, profit,
inventory
Finance
• Ability to align budgets and future
revenue, profit, and budget
projections
Finance
• Feedback loop to influence sales
and operational decisions, demand
shaping
S&OP Meetings
• Meeting focus is short-term and
historical
S&OP Meetings
• Meeting focus is short-term and
historical
S&OP Meetings
• Meeting focus is medium/ long-
term
• Policies to deal with most standard
situations developing
S&OP Meetings
• Defined policies address most
demand/supply decisions
• Focus is on exceptions and refining
standard policies
Process/Technology
• Multitude of spreadsheets
Process/Technology
• Standalone demand and supply
planning tools
• One-way systems interfaces
Process/Technology
• Integrated demand, supply, and
inventory planning tools
• Limited collaboration technology
• Closed loop interfaces
Process/Technology
• External-facing collaborative tools
integrated to internal demand-
supply-inventory planning systems
Where are you today? Where do you think your company needs to be?
1517

Spinnaker’s “5 Lenses” approach brings focus to the full range of perspectives
needed to significantly transform supply chain performance.
Spinnaker Services
That Support IBP Success
Our balanced approach helps client achieve profitable growth, optimize costs, and satisfy demanding customers.
People
• Organizational design,
training development, and
capabilities assessment
• Roles and responsibilities
design and process
mapping
• Change management and
transformation planning
Process
• Best practices assessment
• Root cause analysis of
performance gaps
• Process architecture and
re-engineering
• Value stream analysis and
process simplification
Technology
• SAP APO and IBP
blueprinting, design, and
implementation services
• Systems integration
• Master data assessment,
quality improvement, and
governance
• Data architecture and data
integration services
• Metrics and analytics
automation
Policies
• Supply chain business rule
analysis & definition
• Process impact analysis
• Monitors and compliance
controls definition
• Best practices analysis
Metrics
• Operational &
management metrics
definition
• Change management &
metrics of transformation
success and process
adoption
• Dashboards & analytics
• Industry norms/bests
Roadmapping, planning, & transformation management
1618

Questions
&
Answers
In Closing…
19

Contact Information
Dan Luttner
Business Development Manager
412.760.2750
dluttner@spinnakermgmt.com
David Foster
Senior Manager
720.323.1984
dfoster@spinnakermgmt.com
Jay Nearnberg
Senior Manager
973.727.7174
jnearnberg@spinnakermgmt.com

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