chemistry beakers s&op planning for pharma

Sales & Operations Planning for Pharma: S&OP for API using SAP IBP

The sales & operations in Pharma industry has always been a challenge due to the multitude of packaging, dosage and presentation forms for the same drug. For example, a common fever medicine Acetomenaphin is sold in different dosages – 10mg, 20 mg, 40 mg , different presentation formats – tablets, capsules, syrups , different packaging – 10mg X 10 pack, 10mg X20 pack etc.


Most of the planning systems including APO and IBP provide multiple capabilities to slice and dice the information by using different attributes like brand, packaging, product family, dosage form etc. However, due to proliferation of SKU’s, viewing the demand and supply situation at an aggregate level has always been a challenge. Most of the planning team members would always like to aggregate and view the demand across one common dimension – the Active Pharmaceutical Ingredient, or API, forms a common denominator across the multiple SKU’s.  The classic MRP BOM explosion and supply planning algorithms can be used to explore the demand in terms of API – however, they are not that flexible in terms of doing a quick what-if analysis within S&OP.


Table 1 below shows some sample products and their attributes:

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Table 1: Products

Table 2 shows the API usage by the different finished goods:

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Table 2: API Usage by product (BOM/Production Source item)

Table 3 shows the demand for the finished goods:

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Table 3: Finished Good Demand

Even though multiple  attributes like Product Family, Product Group, Brand etc. are available, it is still difficult to aggregate the demand at higher level in a meaningful way. For example, when aggregating by product family, the numbers 1000 and 1500 are of no use to the planner.

Table 4: Aggregation by Product Family
Table 4: Aggregation by Product Family

By using the power of Attribute Transformation in SAP IBP, it is very simple to define custom master data types and calculations to convert the FG demand into baseline API numbers without running the supply planning heuristics and see them in S&OP.


Table 5 below shows the Master Data used to maintain the API usage by FG:

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Table 5: API Usage by Finished Goods

Table 6 shows the calculation of API equivalent quantity:

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Table 6: API required for each finished good – computed using Attribute Transformation

Table 7 shows the demand aggregated at higher level as compared with earlier aggregation only in terms of FG Demand:

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Table 7: Aggregate Demand View

The flexibility of the IBP planning model utilizing the power of attribute transformation allows  users to easily address the issue related to seeing the aggregate demand across multiple products, customers etc. Though the example is focused on Pharmaceutical industry, the same example can also be applied in other industries – for example, in Paints where in you would like to aggregate in terms of base pigment, Consumer goods where you might want to aggregate the quantities of Coke concentrate, shampoos etc. The solution is flexible and scalable across any dimension – not just the product/location.

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