ITE Consult has been developing business planning and simulation solutions for over 20 years. Their solutions enable what-if scenarios and risk analysis on the fly and help businesses with analytics, predictive forecasting, and flexible planning.
Every cloud-based planning and simulation solution that ITE Consult implements consists of four components:
- Planning task – depends on the planning the client needs. It could be Sales & Operations Planning (S&OP), demand planning, supply planning, inventory planning, or others.
- Data hub – ITE Consult gathers siloed data from different sources that the client has in one place. This is where a simulation model can get the data.
- Simulation models – these vary based on the client’s industry.
- Analytics and dashboards – the platform has built-in statistics, although users can also create their own.
In this real-world project example, we explore how such a solution was tailored to the client’s need for S&OP optimization and learn about the power of the AnyLogic-SAP integration for strategic planning.
Problem
A client needed to optimize their long-term S&OP process. For the task, ITE Consult suggested using their SaaS platform based on SAP Analytics Cloud, AnyLogic simulation software, and Gurobi optimizer integration.
S&OP aims to align sales and operations departments and create a single production plan that matches supply with demand. Simulation is an essential part of this process, as it supports what-if analysis and scenario comparison.
Solution
AnyLogic-with-SAP integration for strategic planning
The key to the S&OP optimization project’s success was the AnyLogic-SAP connection.
Usually, such integration is either database-to-application or application-to-application. In the first setup, SAP serves as a data source for AnyLogic simulation models. In the second, both tools exchange all sorts of data. For example, the data might flow from SAP to AnyLogic and back to SAP.
In this case, ITE Consult chose the full application-to-application integration.
The way the AnyLogic-SAP platform was organized allowed for great flexibility. The client could tailor the platform’s structure – add new columns to the master data and change grouping and hierarchy. The simulation model would swiftly adapt. The client could even substitute SAP with any other ERP tool, and the strategic planning solution would still work the same way.
The S&OP process flow: demand and supply planning with simulation
Following the S&OP process, one of the first steps was a demand forecast. It used the AnyLogic-SAP platform, the company’s historical data, and external factors that could influence the forecast.
In this case, the company considered its historical inflation rate to see how it correlated with sales. Then the client reviewed various demand planning scenarios and drew more insights using AI.
The production overview the client could see on the model run (click to enlarge)
With demand projections and other data, the client could optimize supply planning.
To come up with different supply scenarios, the client’s team used the simulation module within the AnyLogic-SAP platform. On the platform, the team would select the data to load from SAP into the model. Then they would run the simulation for 2-4 minutes and review the results for rough-cut capacity planning.
For simulation inputs, the team used the following data:
- Business metadata
- Demand forecast
- BOMs
- Inventory
The simulation model and the optimization solver would run on this data and send the outputs back to SAP. As a result, the client optimized its production capacity, inventory levels, and labor utilization.
Result
The production data on each finished good in the simulation (click to enlarge)
Due to the AnyLogic-SAP integration, the client found an opportunity to save around $4 million on inventory in the following 6–8 months just by optimizing the inventory levels.
Additionally, on the demand planning side, the client noticed that the Mean Absolute Percent Error and Bias were improving. On the supply planning side, the client now had equipment and labor utilization projections. It also had material requirements projections that considered lead time and minimal batch sizes.
This business project is one of the examples highlighting the power of AnyLogic and SAP integration for strategic Sales & Operations planning, in particular long-term supply and demand plan optimization.
For more examples of AnyLogic and SAP integration, check out the case studies about ice cream production capacity planning and production scheduling for metal meshes.
The case study was presented by David Barbieri Kennedy from ITE Consult at the AnyLogic Conference 2023.
The slides from this case are available as a PDF.
