ALIGN YOUR DECISION-MAKING WITH SAP IBP

A supply chain should support a company’s business by setting up a structure that allows people to make consistent planning decisions, an alignment that contributes to support the company’s strategy. But keeping consistency can be challenging because it requires the involvement of several of the company’s organisational functions in the decision-making process – and additionally, decisions must be aligned across all planning horizons and should have a common goal.

Supply chain planning decisions are not always aligned

While Sales is usually concerned with revenue, market share, customers and discounts, Operations focuses on efficiency, throughput and capacity utilisation, and Finance focuses on net working capital, cash-to-cash cycle and profitability. These different functions tend to use different terms and language and most often also use different plans when they predict future outcomes and which related responses are appropriate.

Moreover, a company’s short-term and long-term decisions are not always aligned. For instance, in the long term, a company could decide to sell a large portion of its volume to certain strategic customers but fail to do so when the daily sales process is executed, prioritising other customers. A company may be harmed if the rules and priorities defined in the longer term are not carefully communicated and followed up on in the short term.

Furthermore, different people sometimes make planning decisions that do not support the supply chain strategy. For example, the supply chain strategy may prioritise efficiency over responsiveness, and thus it would not make sense to expedite goods at premium freight charges with a one-day rush order delivery service.

Bringing consistency to the decision-making process

Conflicting decisions may affect a company’s supply chain performance. Much of this can be avoided by drawing people’s attention to the problems that are relevant to solve and by promoting easy plan sharing between Marketing and Sales as well as Operations and Finance in all planning horizons.

SAP IBP is an advanced supply chain planning tool that can support organisations in this endeavour because it uses a single data model and a single set of numbers that helps communication between different sectors; everybody uses the same language.

Read more about how SAP IBP can support companies in making consistent decisions across all planning horizons here.