Find out how SAP and partner solutions can help consumer products manufacturers respond to volatility across their supply chains and value networks. Learn how collaborative demand and supply planning enables you to develop winning strategies and tactics and respond to market changes quickly and cost-effectively.

1. SAP Solution Brief
Responsive Supply Networks COLLABORATIVE DEMAND AND
SUPPLY PLANNING
HELP CONSUMER PRODUCTS COMPANIES
SYNCHRONIZE SUPPLY TO DEMAND
Collaborative demand and
supply planning allows con-
sumer products companies
to develop winning strate-
gies and tactics across the
supply network. SAP® soft- Globalization is proving to be both a digest data from many different sources.
blessing and a curse for consumer prod- Whether it’s point of sale data from
ware helps your company ucts (CP) companies. With access to retailers, actual orders from customers,
improve visibility and control new regions, consumers, and suppliers, promotional plans from marketing, or
CP manufacturers enjoy an expanding forecasts from your sales team, you
throughout the supply net- world of selling and sourcing opportuni- must harmonize and consolidate these
work, so you can respond to ties. But with this expansion comes com- data streams to get a clear picture of
plexity. Retailers demand shorter inter- demand. Armed with an accurate pro-
market changes quickly and vals, favorable prices, and high product jection of what the market will bear, you
cost-effectively. availability. Consumers want to find items are better equipped to manage planning
on the shelf. And, with components and processes, synchronize supply activities,
raw materials being furnished via a com- and mitigate supply risks.
plex web spread over many locations
and time zones, there are more places SAP® software supports a full spectrum
than ever for things to go wrong. of demand management processes. With
applications that integrate and synthesize
This double-sided dilemma makes it demand creation initiatives, internal and
extremely difficult to put the right products external forecasts, customer demands,
on the right shelves at the right time – and consumer buying trends, you can
and at the right level of profitability. To blend multiple sources of information to
overcome these challenges you need to increase demand accuracy and improve
balance demand and supply within your your responsiveness to ever-shifting
own supply chain as well as partner with consumer buying patterns. As you move
suppliers and customers and establish from a forecast-driven to a demand-driven
new levels of collaboration across func- approach, your company can lower
tional and departmental boundaries. SAP safety stocks and inventory, streamline
can help – with solutions that help you production runs, and cut distribution
proactively manage your internal as well costs – all while maintaining or even
as extended supply network, enabling improving delivery service targets.
you to track fluctuations in demand,
respond to supplier delivery volatility, Respond Faster and Smarter with
and recover from operational disruptions. Integrated Supply Planning
Improve Visibility Through Inefficient or short-sighted supply plan-
Collaborative Demand ning can result in poor resource utiliza-
Management tion, excess inventory, high supply chain
costs, and dissatisfied customers. With
Forecasting, the traditional gauge of mar- uncertainty at all levels of the demand/
ket demand, has been viewed as half art supply continuum, CP companies must
and half science, and almost always does expand supply planning activities across
not predict demand as accurately as the supply network rather than relying on
needed. To get a more comprehensive a top-down, centrally managed approach.
view of demand, you have to collect and With distributed supply planning that

2. links all partners, facilities, and func- The plans developed in each of these
tionalities, your company can establish departments may be independently valid
optimum safety-stock levels and syn- but out of sync with each other or with
chronize delivery schedules for both broader corporate goals. To ensure a
finished products and materials. balance between demand and supply,
these diverse plans need to be aligned
SAP solutions help you improve supply through cross-departmental collabora-
planning by integrating purchasing, tion. S&OP processes should be part
manufacturing, distribution, and trans- of a consolidated plan that accommo-
portation plans into a comprehensive dates your company’s financial goals,
supply planning approach. With applica- marketing efforts, and inventory targets.
tions that enhance key processes such
as safety-stock planning, supply net-
work planning, distribution planning,
To profitably fulfill demand,
procurement, and materials manage- consumer products compa-
ment, you can manage end-to-end sup-
ply chain processes with optimal agility
nies need to extend their your supply network, you can allocate
and visibility. Your company can make supply strategy across the resources to meet strategic or tactical
more informed decisions about quanti- goals, create or alter a promotional plan,
ties to be produced and delivered to
network, establish optimum adjust inventory positions, leverage
appropriate locations, matching cus- safety-stock levels, and syn- capacity at a contract manufacturer,
tomer demand and maintaining targeted or fine-tune production runs.
service levels.
chronize delivery schedules
for both finished products Solutions to Enable Collaborative
Balance Demand and Supply with Demand and Supply Planning
Sales and Operations Planning and materials.
SAP and partner solutions enable CP
Many CP manufacturers face challenges SAP software helps you collaborate companies to build collaborative demand
when responding to disruptions on both across departmental and enterprise and supply planning processes that con-
the demand and supply side of the value boundaries to balance demand and tinuously sense demand fluctuations,
chain. If you manage sales and opera- supply over a distributed network. This supplier delivery volatility, and opera-
tions planning (S&OP) with disparate enables your company to fine-tune op- tional disruptions. Supported business
procedures, systems, data sources, and erations and inventory so you can seize processes include:
network partners, you may not learn market opportunities and mitigate sup-
about exceptions quickly enough to ply risks. When all relevant data, pro- Collaborative Demand Management
respond effectively. Without optimized cesses, and applications are integrated, • Demand signal capture
capacity and inventory, your company you have better visibility, intelligence, Improve forecast accuracy and reduce
becomes vulnerable to inflated supply and control across the extended enter- stock outs with the Vision Chain
chain costs and poor in-stock rates. prise. As you enhance S&OP with rele- Demand Signal Adapter solution.
vant information from distribution, sup- Certified integration with the SAP
Another problem for CP manufacturers ply, purchasing, and marketing units, NetWeaver® technology platform
is the differing views found in functional your company becomes more agile, allows the solution to deliver cleansed
areas such as supply chain management, more responsive, and more profitable. and harmonized demand signals from
purchasing, production, and budgeting. Armed with real-time data from across retailers.

3. • Sales forecast collaboration and then apply these levels across SAP software enables
Improve productivity and enhance the entire supply network to reduce
decision making with Duet™ software. inventory costs
end-to-end supply plan-
Leverage demand planning in the SAP ning across distribution,
Supply Chain Management application • Supply network planning
through a Microsoft Excel user inter- Increase visibility across the overall
manufacturing, procure-
face. Information workers across the supply chain by integrating purchas- ment, and partner orga-
supply network can contribute to ing, manufacturing, distribution, and
planning efforts without having to transportation plans into an overall
nizations for faster and
master unfamiliar applications. supply picture. Simulate different smarter responsiveness
market conditions and implement
• Demand planning and forecasting sourcing decisions based on a single,
at the lowest possible
Leverage state-of the-art forecasting globally-consistent model. cost.
algorithms to anticipate demand for
products while supporting close • Multiechelon inventory optimization
collaboration with your customers Reduce inventory costs with the
to exchange and enhance demand SmartOps Multistage Inventory • Distribution planning
data. Improve forecast quality with Planning & Optimization solution, Determine which demands can be
a consolidated demand plan across an SAP-endorsed business solution fulfilled using existing resources and
regions, companies, and departments. that helps you calculate how much calculate optimal strategies for allo-
of each item you should carry – why, cating supply and replenishing stock-
• Vendor-managed inventory and where, and when ing locations
responsive replenishment
Improve inventory replenishment and • Rough-cut production planning Sales and Operations Planning
collaboration through state-of-the art Improve medium- to short-term plan- • Cross-company and departmental
vendor-managed inventory functional- ning to maximize the product mix per data analysis
ity. SAP applications enable true time period and determine the amount Transform information into insight
demand-driven replenishment based of capacity to be used with business intelligence software
on forecasting, replenishment planning, from SAP and Business Objects, an
and truckload building with or without • Procurement planning SAP company. With a comprehensive
promotion management. Leverage the results of rough-cut set of tools, planning and simulation
production planning to optimize the functionality, and a data warehouse,
• Trade promotion planning procurement of direct materials, con- you can make sound decisions and
Increase sales and solidify retailer solidate purchasing activities, and take targeted actions.
relationships with integrated head- determine volumes for mid- to long-
quarters and field planning, customer term contracts with suppliers • Demand and supply planning
sell-in and negotiation, execution, Optimize operating margins by
validation, and evaluation of trade • Supplier collaboration balancing global demand and supply
promotions Collaborate with suppliers and sub- across enterprise functions and net-
contractors to enable collaborative work participants, while establishing
Supply Planning planning with direct interaction and the right resources to fulfill demand
• Safety-stock planning data exchange profitably.
Determine the optimal levels of safety
stock to satisfy unexpected demand,

4. QUICK FACTS www.sap.com /contactsap
Summary
Effective supply network management depends on synchronizing and balancing ever-
changing demand and supply dynamics. SAP® software helps consumer products manu-
facturers gain the visibility and collaboration they need to meet customer expectations
and optimize profits.
Challenges
• Serve more customers in more markets
• Manage growing product and network complexity
• Reduce inventories, lead times, stock outs, and supply chain costs
• Improve efficiency and agility so the right product is on the right shelf at the right time
Supported Business Processes and Software Functions
• Collaborative demand management – Integrate all relevant demand processes and data
sources across functional and enterprise boundaries
• Supply planning – Integrate distribution, production, and inventory planning to improve
your responsiveness to missed deliveries, product shortages, and other disruptions in
the supply network
• Sales and operations planning – Create a more profitable comprehensive plan by
blending information across functional and organizational boundaries while providing
a flexible tool set for preparing and executing sales and operations planning initiatives
Business Benefits
• Seize revenue opportunities, eliminate stock outs, and provide a better shopper
experience by gaining better visibility into customer and consumer demand
• Improve in-stock rates and service levels, optimize network inventories, and reduce
supply chain costs by responding quickly and profitably across the supply network
• Profitably meet customer expectations and be a better partner for growth by
out-executing your competition and balancing demand and supply
For More Information
To learn more how SAP solutions support collaborative demand and supply planning,
contact your SAP representative or visit us on the Web at 50 091 327 (08/10)
www.sap.com/solutions/executiveview/supply-chain/index.epx. ©2008 by SAP AG.
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