New product forecasting is always a challenge for most organizations. FMCG and Food & Beverage companies, in particular, experience this frequently — sometimes as often as twice a year.

Ironically, most planners rely on manual forecasts that are numerically entered directly into the system, typically sourced from a brand manager responsible for the category. At times, this could be as basic as a straightline forecast based on an annual “gut feeling”.

IBP offers a variety of options to model and plan for new product introductions.

-Typically, we use a grid like the one below when mapping out a planning strategy for our clients.

-When it’s an entirely new product, forecasting becomes largely guesswork — and it’s usually better if the Marketing team makes this guess rather than the Planning team. They’re more likely to have conducted market research to derive a volumetric estimate rooted in consumer preferences for the new product.

-Luckily, more often we deal with other scenarios such as product transitions, packaging or sizing changes, and line extensions.

New Product Planning Strategies in SAP IBP

SAP IBP provides several effective approaches for Product Lifecycle Management (PLM), which can be leveraged for:

  • Modeling by Analogy – Copy the pattern of a similar product.
  • Product replacement – Use the history from the product being replaced.
  • Line Extensions – Use the Scaling or Weighting Factor to adjust volume.
  • Cannibalization – Use the Phase-out algorithm to deplete old inventory.

In addition, IBP offers robust scenario planning capabilities that allow planners to model demand variations — such as 2X, 3X, or 0.5X scenarios  depending on how the new product is perceived by the consumers. This is critical to ensure the supply chain can effectively meet demand across different potential scenarios.

Feel free to comment your approach to modeling new products and how you have leveraged the PLM module in IBP.

Implementing and executing PLM is quite straightforward, though it does require some pre-planning — particularly around SKU transitions, and defining phase-in and phase-out dates in advance.

To explore more best practices and resources on IBP, visit Valtitude/demand Planning.Net