For months, SAP has been communicating a lot about Order-Based Planning (OBP), this topic being the current development focus for SAP IBP evolutions. As a result, customers implementing the SAP IBP solution may get confused, wondering: “Are we not implementing the wrong Time Series module, instead of OBP?” or “SAP demonstrates in OBP features we must have that we cannot have in Time Series!”.
Before answering these questions and others, let me quickly explain what Time Series technology is and what Order-based one is.
First, Time Series is the base and unique technology used for the DEMAND, S&OP, INVENTORY, DDMRP, SUPPLY, and CONTROL TOWER modules. No orders in these modules. This technology organizes data in periods, assigned to dimensions, recorded in key figures, like you would naturally do with an Excel worksheet.
Say, for example, you wish to manage your inventory using Excel for any reason. For that, you create a new sheet with a table format, with two columns on the left, Product ID and Location ID, followed by a period column shown in days, weeks, or months. Then on the right, you place a Projected Stock column, a Demand column, a Supply column, and finally a Safety Stock column. You create formulas to propagate projected stock along the periods. Once done, you populate each row to mention your product combinations with locations and periods and enter the initial stock, your demand plan and supply plan in corresponding columns.
IBP Time Series is doing precisely this and more, obviously. In short, Time Series technology is well designed for tactical and strategic planning, whose processes require aggregation, disaggregation, and period-based planning. Today, the large majority of IBP customers (more than 1,000) are using this technology, as they mostly implemented Demand Planning or S&OP Planning or Tactical Supply Planning, or Safety Stock Planning, or Demand-Driven MRP (DDMRP).
Let’s now look at the OBP side, which is only used by the RESPONSE part of the SUPPLY & RESPONSE module. OBP is the last kid of the IBP family, born five to six years ago, and launched a bit too early. In this other world, everything is an order. Each order consists of inputs (negative quantities representing demand), outputs (positive quantities representing inputs), and conversion operations in the order, such as shifting lead time, resource utilization, and so on.
Stock is an order with only an output (+). The forecast is an order with only an input (-). The stock transfer is an order with an entry at the shipping point and an exit at the receiving point, with a shifting of the transportation time. And all the other things like production orders, purchase requisitions, and so on.
Too technical, Daniel. And so what?
Simply, OBP allows technical things that are not really possible in Time Series. The best example is the OBP capability to link orders in a pegged network to explain, for instance, the impact of replenishment orders at the component level of a factory versus the final usage at the finished-good level of a distant DC.
But functionally speaking, Daniel, what is it?
With OBP, SAP can provide short-term-oriented processes like the Goods Deployment feature, that allows confirmation to downstream locations from an upstream sourcing factory, which is crucial to FMCG and CPG customers. More recently, SAP has complemented this with a TLB (Transport Load Builder) that allows optimizing the loading of trucks between locations. You cannot do so without the Order Level dimension.
However, why is this name RESPONSE for OBP?
The response is a known word in supply chain management that describes how a solution can match demand and supply in order to confirm, for instance, a customer with the delivery date and quantity, or to confim to a foreign selling organization how much of their initial forecast will likely be produced and be available to them. In short, OBP also provides the following processes: constrained forecasting, constrained demand, and allocation setup later used in an ATP (Available To Promise) engine in sales order entry.
So coming back to the initial question of this article, you now understand OBP is not a competitor to Time Series. Times Series focuses on tactical and strategic planning, meaning mid and long-term horizons, whereas OBP contributes to optimizing short-term material flows avoiding disruptions and expediting. It can also be considered as a transition phase between planning and operation, before execution. Yet, the complete picture after OBP is to nicely perform execution tasks in the ERP, which is all about the e/PPDS component sitting in S4. But let’s keep this topic for an article to come.