Looking to improve forecast accuracy in SAP Integrated Business Planning (SAP IBP)? If you're managing products where secondary items depend on primary ones, attach rate planning could be the answer.
This blog post explains how you can model attach rate planning in SAP IBP using its configuration and Cloud Integration for Data Services (CI-DS) capabilities, with a real-world example from the high-tech manufacturing industry.
Why is forecast accuracy critical? We all know that when it's off, supply chain efficiency suffers. And for companies with configurable products, it’s even harder to nail down. That’s where attach rate planning steps in—it helps forecast demand for secondary products based on their relationship with primary ones, like processors for servers or accessories for cellphones. Imagine having the ability to predict demand with less manual effort and greater accuracy!
In this post, I’ll walk you through the process of setting attach rate planning up, from configuring product and customer master data to integrating it with SAP CI-DS. Plus, you'll learn how to create an Excel-based planning view to track and forecast attach rates. By leveraging this approach, you can not only fine-tune demand forecasting but also optimize supply and capacity planning. Ready to elevate your forecasting game? Let’s dive in!
What Is Attach Rate?
The attach rate (AR) is a key metric that represents the ratio of secondary product sales connected to the sales of a primary product. In the context of forecasting, this relationship is utilized through a process known as attach rate planning. This approach focuses on predicting the demand for dependent options—those products that either comprise components of the primary product or are closely associated with its sales but do not form part of its assembly.
Why Accurate Forecasting Matters—and How Attach Rate Planning Can Help
Forecasting is a core function within the demand planning process, yet many organizations still rely on instinctive methods, with limited statistical analysis or automation. In contrast, companies that forecast effectively can build greater cross-functional trust, as well as strengthen relationships with suppliers, distributors, and customers.
Demand forecasts, as outputs of the demand planning process, play a critical role in downstream functions like supply and capacity planning. Accurate forecasts are essential to the success of supply chain planning overall. Poor forecast accuracy can lead to suboptimal sourcing and production decisions, often resulting in either excess inventory or stockouts. These issues can cause backorders, lost sales, and ultimately impact both gross margin and the bottom line.
Attach rate planning plays a key role in enhancing forecast accuracy, especially for companies managing configurable products or items that sell alongside primary products. By modeling the natural link between primary and secondary products—like laptops and RAM or servers and processors—attach rate planning allows companies to more accurately predict demand for related items. Rather than depending on broad trends or manual adjustments, demand planners can use attach rates to synchronize forecasts with actual product demand patterns automatically.
Attach rate analysis is a powerful tool for measuring how effectively your organization sells related products and services alongside the main product. A high attach rate indicates strong customer satisfaction and effective sales strategies, suggesting that customers appreciate your business’ offerings. Conversely, a low attach rate may signal the need for a change in marketing strategy to boost sales of related products.
Additionally, analyzing attach rates helps generate more accurate forecasts for secondary products, enabling better planning for supply and related capacity constraints.
In the high-tech sector, consider the example of a configure-to-order (CTO) server, which consists of essential components like processors, hard drives, and memory. When a customer places a specific order for a server, various component options may be required—such as RAM options of 32 GB, 64 GB, or 128 GB, or hard drive choices of 1 TB, 1.2 TB, or 1.8 TB. These components are typically made to stock or procured as needed and are assembled only once the order is confirmed.
The challenge arises when trying to forecast demand for a 1 TB or 1.2 TB hard drive without knowing the exact server configuration that the customer will choose. This uncertainty underscores the fundamental problem that attach rate planning seeks to address.
Another pertinent use case can be found in the telecom industry, where forecasting cellphone accessories, such as screen protectors and cases, is crucial. These accessories are closely linked to cellphone sales and can effectively utilize attach rate planning. For instance, a cellphone case designed for both cellphone Model 1 and Model 2 may exhibit different attach rates depending on which model is purchased. This variation highlights how understanding attach rates can improve forecast accuracy for complementary products across various industries.
Attach Rate Planning: Process Flow in SAP IBP
Currently, SAP IBP does not have any out of the box functionality for attach rate planning; however, it can be modeled in SAP IBP with a creative use of available features.
It’s crucial to understand that each product option will have its attach rate calculated against its corresponding header product. If the same option is associated with multiple headers, it will have different attach rates for each one. Moreover, the attach rate will vary across different customers ordering the header product. In our solution design, I determined attach rates at the product-customer level.
Attach Rate Design in SAP IBP and CI-DS
The attach rate solution requires configuration on both the SAP IBP and CI-DS sides. The following configuration objects are needed:
- Master data configuration
- Addition of attach rate related attributes to the SAP IBP product master.
- Creation of new master data specifically for attach rate products.
- Optional: Addition of AR-related attributes to the customer master. This is applicable when attach rates need to be determined at the product-customer level, ensuring that calculations are restricted to relevant customers.
- Key figures configuration
- Creation of additional key figures to support attach rate history calculations and attach rate forecasting (details on this are provided in the key figure section below).
- CI-DS tasks design
- Creation of multiple CI-DS tasks to read and join AR-relevant master and transaction data, enabling the derivation of linked server history (details are provided in the CI-DS tasks section below).
- Attach rate planning view
- Design of an SAP IBP Excel planning view for attach rate planning, utilizing AR-related key figures and planning levels.
Master Data Configuration
In the SAP IBP product master data, two attributes are added: “Attach Type” and “Attach Group”.
Attach type specifies if it’s an independent product (e.g. server) or dependent (e.g. processor 2.80 GHz). Value “I” denotes independent and “D” denotes dependent.
Attach group is an optional attribute to use as an AR base (attribute of new master data “Product for Attach Rate”) if any custom grouping of independents are needed to link to the dependent.
Creation of New Master Data: Product for Attach Rate
The solution requires you provide the ability for the business to flexibly link options to the servers. To enable this, new SAP IBP master data was created (“Product for Attach Rate”) with “AR Base” and “AR Base Value” as attributes.
AR base specifies the solution to link options to multiple individual server/server family/product line or category of servers.
AR base value specifies values of the AR base.
In my example, I used the following base values:
- F- Product Family
- S- SKU
- L- Product Line
Addition of AR Related Attribute to Customer Master (Optional)
This step is optional if your scenario involves attach rate calculation at product-customer level. Not all customers may be relevant for attach rate planning. Therefore, an attribute “AR Relevant” can be added in the SAP IBP customer master to restrict the calculation of attach rates only for the relevant customers.
Key Figures Configuration
The following key figures are required for attach rate planning:
CI-DS Tasks Configuration
The following CI-DS tasks are created and executed in the same sequence to derive the “Linked Server History”:
- CI-DS Task 1: Lists out the customers which are AR relevant based on the customer master data table.
- CI-DS Task 2: Based on the attach rate base and its values, forms a list of options and linked servers.
- CI-DS Task 3: Joins the option-server list with the AR relevant customers.
- CI-DS Task 4: Reads the history and forecasts values of all servers at the product-customer level from the “History or Forecast” key figure.
- CI-DS Task 5: Joins the options with the “History or Forecast” key figure values of servers at the product-customer level.
- CI-DS Task 6: Calculates linked server history against an option by summing up the linked “History or Forecast” key figure values.
Attach Rate Planning View
Create an attach rate planning view to analyze attach rates for options based on linked server data and to derive an attach rate forecast. The historical attach rate for each option can be calculated by dividing the option history by linked server history, as shown in the “Attach Rate History” key figure. For future projections, planners can apply suitable statistical models to forecast attach rates in the upcoming horizon. The combination of linked server history and attach rate final will determine the attach rate forecast.
Additionally, options can also be forecasted statistically based on their usage history, displayed in the “Statistical Forecast” key figure. This statistical forecast can then be compared against the attach rate forecast. The business can decide to use either the attach rate forecast or the statistical forecast as input for the demand planner, ultimately contributing to the final consensus forecast for each option.
Conclusion
Attach rate planning in SAP IBP changes the games for companies managing products with interdependent demand. By setting up a tailored attach rate solution through SAP IBP and CI-DS, businesses can predict demand more accurately for secondary products tied to primary ones, helping streamline the forecasting process and reduce manual effort. As we’ve explored in this article, attach rate planning can be adapted to the unique needs of different industries, including high-tech and telecom.
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