Taking the pain out of the process: Joint Business Planning with SAP BPC 10.1

11 February 2014

Sue Kirby

Sue Kirby

Global CoE Lead, Enterprise Performance Management

*This blog post was co-authored by Sue Kirby and David Williams*

A reason to implement the Unified Model

The full blown installation of SAP BPC 10.1 requires a sizeable investment in SAP HANA. Whilst this might seem like a scary feat, the business benefits cannot be underestimated.

We’ve been working with a global FMCG company that has come a long way in its commercial forecasting journey, which includes the successful implementation of SAP BPC 10.0.

However, it is still one step away from integrating its Joint Business Plans into this system. Whilst the company has identified the benefits of bringing JBPs into its commercial planning system and even designed the blueprint of what this would look like, system performance is the one remaining blocker to implementation.

Many large retailers across the world demand joint business plans (JBPs) to be built with their suppliers. While this can have major benefits, incentivising mutual growth, they are also fraught with danger for the supplier.  One such concern for FMCG companies is that they must be prepared from the customer’s perspective, predicting retailer turnover and margin based on a set of assumptions. Many FMCG companies occupy a lot of finance’s time and stretch Excel’s capability to create these external views of the joint business plans. These spreadsheets are difficult to track, update and often contain errors. As a result of these shortcomings, some FMCG companies have started to systemise this process.  

System performance and process is crucial to the sales teams at the FMCG client we are working with. It’s key when working on their JBPs, as filling in spreadsheets is not going to increase sales! Due to the increased data volumes (from integrated EPOS data) and the complexity of the JBP planning screens (multiple SKU planning), its existing SAP BPC 10.0 solution simply wouldn’t give them the speed required.  For this reason, the JBP spreadsheets remain and the output from these must then be inputted as their demand profile into SAP BPC 10.0 as part of the monthly Integrated Business Planning (IBP) process.

Essentially, this means that the work is being done twice. Once at SKU level in the JBP plan and then again, at an aggregated level that SAP BPC can accommodate, for the IBP.

In addition, EPOS data from the top four retailers has also been brought into BW which could allow the business to determine the retailers’ profitability at SKU level.  However, due to the number of SKU’s and the granularity of data, we have to aggregate before loading into SAP BPC. Again, this issue of granularity is preventing the company from fully systemising its processes and getting the most from the data available.

How can SAP BPC 10.1 alleviate this dual entry?

The latest offering from SAP in the forecasting space is SAP BPC 10.1. SAP has listened to the geeks on the ground and brought together the best of both worlds with SAP BW-IP and SAP BPC. It has even gone one step further and given it a SAP HANA backend. But what does this mean to the non-geeks and how could it help FMCG companies in this quandary?

Well, SKU based granularity becomes an immediate possibility.

SAP BPC 10.1 in the unified model uses SAP HANA which means its superfast. It can process multimillions of records in milliseconds. Of course, any calculations taking place in the Excel front-end of SAP BPC would still be at the mercy of Excel’s capabilities but if the users are doing in it Excel now, they can do it in SAP BPC Excel with SAP HANA in the back end at SKU level.

Using SAP HANA in the back also enables EPOS data to be kept at SKU level so the sales team can forecast what the retailer profitability would be at SKU level. This gives them confidence when discussing their JBP’s with the retailer. But SAP BPC 10.1 goes ones step further on this point.

Historically, when reporting on data in SAP BPC (e.g.  SKU level forecast) together with data in SAP BW (EPOS data from Retailers), the data is either loaded from SAP BPC to BW or vice-versa. This is because the way the data is stored in SAP BPC differs from the way in which it is typically stored in BW. 

However, with SAP BPC 10.1, the data in the BPC model can be stored in the unified model, which means it’s stored in the same format or rather “unified” with the SAP BW data. This enables the easy creation of reports over both SAP BPC and EPOS data together without moving it around. This vastly reduces the amount of data storage required and enables real-time decision making. They can now track performance and forecast against both internal and external targets and can scenario plan in both views. This integration makes life simpler for the sales team and means that customers can be continually engaged in updating and evolving the joint plans as market conditions change. 

From an IBP perspective, fully systemising JBPs gives an external reality check on the business plan and highlights potential financial exposure if the plans are starting to go awry.  It also brings joint business plans out into the open.  All too often, JBPs are negotiated and then tucked away in a drawer without the business truly understanding the potential impact of them on the financial & strategic direction of the company. Building them into the IBP enables this full analysis to be done, giving control back to the business management review team.

 

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