Risk Analysis for Business Planning using SAP IBP

By: Krypt Team - September 27th, 2019

Authored by: Shailendra Kumar

Challenges, Risks & Opportunities of Global Supply Chains

Across industries, supply chains are getting more complex as businesses spread globally, involving diverse products. The dynamics of global marketplace and the consumer expectations drive immense pressure on the businesses to accelerate their time-to-market. Complex market dynamics lead to countless challenges along with risk & opportunities in supply chain planning and execution, which need to be addressed appropriately.

SAP IBP helps mitigate the challenges of risks and also capture the benefits of opportunities in supply chain planning and execution using a Driver based App by SAP, which we shall explore in detail in this blog.

Risk Analysis using SAP IBP

Recently released Driver Based planning app by SAP supports business users to capture business drivers for e.g. Risk, Opportunities and include them into planning. Any supply chain drivers can also be captured depending upon the nature of business or challenges faced. Once the business user has captured qualitative and quantitative information, the users can then utilize this evaluated information in a form of a key figure for multilevel planning.
Drivers can be classified as shown in the image below.

Drivers can be Internal or external which leads to an event impacting business or your organization. It can be negative or positive. If it impacts negatively then it’s a risk to functioning of supply chain and if it effects positively then it’s an opportunity.

SAP IBP helps in capturing these drivers and likewise a planner can capture these drivers and carry out its planning during its planning cycle for its business functions for e.g. demand or supply department. Some of the examples of these drivers are shown in the image below.

How are Risks Identified & Assessed?

All the events identified with the impacts are categorized as High, Medium or Low risks which forms a part of Demand Review planning where in all the stakeholders take part in decision making and then the relevant drivers for the supply chain plan are considered.

The below image shows a high-level process plan where a demand plan is generated after taking inputs from Sales, Marketing etc. and then is analyzed with Risk and Opportunity in a Demand Review meet and then the relevant drivers are considered and forms a supply chain plan and accordingly the adjusted demand plan is approved.

Driver-based App

Using Driver Based application available in SAP IBP, user can directly create the drivers identified (Risk or Opportunity) in the app as shown below.

A detailed view of any of the risk identified consists of type of driver with description, product family affected along with region and for the time period. It also shows the quantity identified during risk assessment being affected for the time period.

The below risk and opportunity drivers identified are an example and it can be included in the planning cycle for the affected time period. This helps in analyzing demand plan for the planning cycle and which can be further be included in supply plan, inventory plan after which the Constrained plan or Unconstrained plan (depending upon the business function) can be send back to S/4 HANA or any legacy system for operational activities.