Extending SAP ERP Capabilities with AI: Best Practices for IBP

The webinar “Extending SAP ERP Capabilities with AI: Best Practices for IBP” is designed to explore how AI integration can address challenges within the Integrated Business Planning (IBP) process, enhancing SAP ERP capabilities and refining best IBP practices for greater effectiveness.

Michal Svatek, Supply Chain Professional with more than 15 years of experience in the supply chain of global production companies. He successfully implemented and supported more than 200 process improvement and digitization projects.

Jihad Ashour, Supply Chain Professional with 10 years of experience in supply chain management and 6+ years of experience in SAP implementation project management, business process development, S&OP Management.

Natalie Lopadchak-Eksi, PhD(C), CSCP, VP of Partnerships at GMDH Streamline, experienced business development & communication expert who consolidates supply chain experts around the world.

Amy Danvers, Supply Chain Professional, S&OP implementation expert at Streamline. BA in International economics and trade, Supply Chain expert with 4 years of experience in procurement operations.

IBP Process Introduction

Integrated Business Planning is a strategic planning process that aligns business objectives, financial goals, and operational plans across an organization. It brings together functions such as sales, marketing, finance, supply chain, and manufacturing to create a single integrated plan that drives better decision-making and execution.

The process typically starts with strategic review to assist the long-term goals of the organization, the market trends and competitive landscape to identify the key drivers and external factors that may impact the business.

“There is not so much need to convince people of the importance of the IBP process itself. It’s more about the whole corporation and how you can set it up and how this can be orchestrated that it works and that is bringing value,” – said Michal Svatek, a Supply Chain Professional.

Is ERP Enough For IBP?

ERP systems are crucial for streamlining operations within an organization, but is ERP enough for Integrated Business Planning? While ERP excels in managing essential business processes such as finance, HR, production, and supply chain, it often falls short in providing the advanced planning tools and capabilities required for IBP.

ERPs typically offer basic forecasting and planning features, but IBP demands more sophisticated tools for demand sensing, predictive analytics, and scenario modeling. Additionally, ERPs lack the real-time visibility necessary for quickly adjusting plans based on market changes. Real-time visibility into sales, inventory, and production is vital for taking timely and appropriate actions.

“ERP systems are essential for managing day-to-day operations, but they may not provide the advanced planning and forecasting tools needed for decision-making and the flexibility to respond to market changes,”– said Jihad Ashour, CEO at Deep Horizon Solutions.

By incorporating advanced analytics and fostering real-time data integration and collaboration, organizations can significantly enhance their IBP processes, leading to greater efficiency and responsiveness.

The Impact of the Right Technology

Real-time planning, integrated data, advanced analytics, collaboration, and scalability are all crucial for effective Integrated Business Planning.

Modern technology enables IBP teams to swiftly respond to market changes, simulate various scenarios, and assess their impacts. This agility is essential for maintaining a competitive edge.

A robust IBP platform integrates data from diverse sources, providing a single source of truth. This ensures that all stakeholders have access to consistent and accurate information.

Leveraging modern algorithms, advanced analytics can extract actionable insights from large datasets. This leads to more accurate forecasts and valuable insights that inform strategic decisions.

Enhanced collaboration between sales, finance, and supply chain functions is facilitated by modern tools that offer full end-to-end visibility. This unified approach improves decision-making and operational efficiency.

During periods of growth, mergers and acquisitions, and market changes, it is vital to seamlessly integrate new branches, sales channels, and production units. This ensures scalability and smooth transitions.

AI-Based IBP Workflow In Streamline

The entire Streamline tool is designed to connect data from your ERP system or multiple sources, such as Excel, SAP, and different ERP systems, into a single source of truth. This integration allows for the visualization of consolidated data.

While Streamline provides powerful automation and analysis, it’s crucial to incorporate inputs from your marketing teams about new products, promotions, and changes in customer relationships. No software can automatically account for events like winning or losing a customer or opening a new branch. Therefore, Streamline allows you to create various versions of forecasts to accommodate these dynamic factors.

The AI-Based IBP Workflow in Streamline includes:

• Data Integration and Consolidation: Collect and unify data from multiple sources into a single system.
• Demand Planning and Forecasting: Generate accurate forecasts based on consolidated data and various inputs.
• Supply Planning: Align supply with forecasted demand to ensure optimal inventory levels.
• Performance Monitoring & Dynamic Simulation: Continuously monitor performance and simulate different scenarios to adapt to changes.
• Collaboration & Communication: Foster collaboration across departments with shared data and insights.

By following this workflow, Streamline enables efficient, AI-driven Integrated Business Planning that enhances decision-making and operational efficiency.

IBP Integration Results

Here are some outcomes resulting from IBP integration based on Streamline customer success stories:

• Service levels. Implementing Integrated Business Planning has yielded significant improvements in service levels, with enhancements ranging from 5% to 20%. This improvement directly impacts customer satisfaction and loyalty by ensuring better service levels and on-time delivery. The key drivers behind these results include a substantial increase in forecast accuracy, improved by 10-40%, and reduced lead times for both suppliers and customers.
• Operating Margins. Implementing IBP has led to operating margin improvements of 1% to 5%, significantly boosting profitability. These gains are primarily achieved through cost reductions and enhanced efficiency, underscoring the financial benefits of integrated and optimized planning processes.
• Revenue growth. Implementing IBP has resulted in revenue growth improvements of 2% to 10%. This growth is driven by enhanced demand fulfillment and increased market responsiveness, allowing businesses to better meet customer needs and capitalize on market opportunities.
• Cash-To-Cash Cycle Time. Implementing IBP has led to improvements in cash-to-cash cycle time ranging from 10% to 30%. This enhancement in liquidity and working capital management is driven by a 10-15% improvement from inventory optimization and a 10-20% reduction in order fulfillment time and supplier lead time.
• Production Planning. Implementing IBP has resulted in a 5-20% improvement in production planning, significantly reducing downtime and enhancing resource utilization through more accurate planning.

The Bottom Line

In essence, IBP, coupled with the right technology such as Streamline, empowers organizations to navigate the complexities of today’s business landscape with agility, foresight, and resilience, driving sustainable growth and competitive advantage.

“With Streamline, you can achieve optimal inventory management by ensuring the right inventory is in the right place at the right time,” – said Michal Svatek, a Supply Chain Professional.