Two-Tier ERP: SAP IBP integration with Subsidiary-HQ model

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SAP’s Two-Tier ERP strategy with SAP S/4HANA Cloud Public Edition offers headquarter-subsidiary, central services, supply chain ecosystem deployment models enabling business and IT to work together to build sustainable, scalable solutions providing all benefits of cloud deployment – agility, standardization and low total cost of ownership (TCO) – while maximizing existing investments in their ERP systems.

The two-tier model can be adopted by businesses who have already deployed tier 1 on their existing systems like the ECC or SAP S4/HANA private cloud and looking to deploy the 2nd tier to S4/HANA public cloud.

 

 

Business Scenario:

Integrated Business planning (IBP) on a two-tier model can specifically be applied in scenarios where the headquarters (HQ) is responsible for overall demand aggregation and global supply chain strategy, while regional subsidiaries handle local sales forecasts based on market conditions. The use case for this could be with industries such as consumer electronics, automotive parts, or pharmaceuticals with regional demand variations or FMCG companies where HQ maintains planning integrity, but subsidiaries influence short-term demand signals.

Process Steps:

One of the key criteria for a simple demand planning scenario in the 2-tier setup is the master data and transactional data sync with IBP.

 

Detailed steps are as follows:

Integrate master data such as product, location and customer master from the Headquarters (Private cloud) to IBP using SAP Cloud Platform Integration for data services (SAP CI-DS)Integrate transactional data such as the historical sales order from both the public and private clouds to IBP using iflows (CI) and CI-DS respectively.The delta of two sales order numbers (Actuals sales quantity) is then used to run the forecasting algorithm in IBP.IBP captures the total demand quantity, which is sent back as Planned Independent Requirements (PIRs) to the Headquarters (Private cloud) for generation of production orders.

Business Benefits:

Local teams add market intelligence to statistically driven HQ forecasts, resulting in better demand signal accuracy.SAP IBP ensures a harmonized demand planning process, reducing inconsistencies between regions.HQ and subsidiaries can collaborate in real time on the same planning data, enabling quick alignment.HQ can own macro-level forecasting and strategy, while subsidiaries focus on operational/tactical forecast adjustments—reducing micromanagement and empowering local teams.Clear roles and responsibilities improve data quality and accountability, as the model defines ownership of planning at each organizational level.Workflow and collaboration features in SAP IBP (e.g., Excel add-in, task management) allow faster alignment between HQ and subsidiaries on consensus forecast.

Integration Setup:

Reference links:

SAP ERP and SAP IBP technical integration using CI-DS.

How to use SAP Cloud Integration for Data Services (CI-DS) to load data from S/4HANA with Generic Extractor – Part 1

How to use SAP Cloud Integration for Data Services (CI-DS) to load data from S/4HANA with Generic Extractor – Part 2

Getting Started with iFlows in SAP Integration Sui… – SAP Community

Overview | SAP IBP – Integration with SAP S/4HANA Cloud Public Edition | SAP Business Accelerator Hub

Conclusion:

Product manufactured at the factory location or the headquarters for their subsidiaries, calls for end to end visibility of planning and timely execution of supply chain. Based on the demand forecasting/planning at the subsidiary side, manufacturer at headquarters can generate right production orders to prevent over/under supply scenarios.

 

 

​ SAP’s Two-Tier ERP strategy with SAP S/4HANA Cloud Public Edition offers headquarter-subsidiary, central services, supply chain ecosystem deployment models enabling business and IT to work together to build sustainable, scalable solutions providing all benefits of cloud deployment – agility, standardization and low total cost of ownership (TCO) – while maximizing existing investments in their ERP systems.The two-tier model can be adopted by businesses who have already deployed tier 1 on their existing systems like the ECC or SAP S4/HANA private cloud and looking to deploy the 2nd tier to S4/HANA public cloud.  Business Scenario:Integrated Business planning (IBP) on a two-tier model can specifically be applied in scenarios where the headquarters (HQ) is responsible for overall demand aggregation and global supply chain strategy, while regional subsidiaries handle local sales forecasts based on market conditions. The use case for this could be with industries such as consumer electronics, automotive parts, or pharmaceuticals with regional demand variations or FMCG companies where HQ maintains planning integrity, but subsidiaries influence short-term demand signals.Process Steps:One of the key criteria for a simple demand planning scenario in the 2-tier setup is the master data and transactional data sync with IBP. Detailed steps are as follows:Integrate master data such as product, location and customer master from the Headquarters (Private cloud) to IBP using SAP Cloud Platform Integration for data services (SAP CI-DS)Integrate transactional data such as the historical sales order from both the public and private clouds to IBP using iflows (CI) and CI-DS respectively.The delta of two sales order numbers (Actuals sales quantity) is then used to run the forecasting algorithm in IBP.IBP captures the total demand quantity, which is sent back as Planned Independent Requirements (PIRs) to the Headquarters (Private cloud) for generation of production orders.Business Benefits:Local teams add market intelligence to statistically driven HQ forecasts, resulting in better demand signal accuracy.SAP IBP ensures a harmonized demand planning process, reducing inconsistencies between regions.HQ and subsidiaries can collaborate in real time on the same planning data, enabling quick alignment.HQ can own macro-level forecasting and strategy, while subsidiaries focus on operational/tactical forecast adjustments—reducing micromanagement and empowering local teams.Clear roles and responsibilities improve data quality and accountability, as the model defines ownership of planning at each organizational level.Workflow and collaboration features in SAP IBP (e.g., Excel add-in, task management) allow faster alignment between HQ and subsidiaries on consensus forecast.Integration Setup:Reference links:SAP ERP and SAP IBP technical integration using CI-DS.How to use SAP Cloud Integration for Data Services (CI-DS) to load data from S/4HANA with Generic Extractor – Part 1How to use SAP Cloud Integration for Data Services (CI-DS) to load data from S/4HANA with Generic Extractor – Part 2Getting Started with iFlows in SAP Integration Sui… – SAP CommunityOverview | SAP IBP – Integration with SAP S/4HANA Cloud Public Edition | SAP Business Accelerator HubConclusion:Product manufactured at the factory location or the headquarters for their subsidiaries, calls for end to end visibility of planning and timely execution of supply chain. Based on the demand forecasting/planning at the subsidiary side, manufacturer at headquarters can generate right production orders to prevent over/under supply scenarios.    Read More Technology Blog Posts by SAP articles 

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