Effective supply chain management demands both efficiency and precision. At Valtitude, we combine SAP Integrated Business Planning (IBP) with a sophisticated segmentation algorithm to classify products and the product-customer matrix. This structured approach enhances both demand modeling and inventory strategies, helping our clients meet market demands while optimizing resources.

Strategic Segmentation for Better Planning

Our proprietary algorithm segments products and product-customer combinations into strategic clusters. This process goes well beyond traditional ABC analysis.

We examine dimensions, including demand volatility, revenue contribution, order frequency, and product lifecycle stage. By doing so, we uncover patterns and group items with similar characteristics, allowing for truly customized planning.

For example, products with steady, high-volume demand are grouped separately from those with sporadic or seasonal demand patterns. These distinctions inform specific forecasting approaches and inventory targets, ensuring ensuring every segment is managed with the most reliable techniques and policies.

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Segmentation strengthens our approach in two key ways:

  • Demand Modeling: By matching the right forecasting methods to each segment, we improve both accuracy and responsiveness. For instance, stable segments can leverage statistical time-series models, while highly volatile or new products may require manual adjustments or specialized algorithms.
  • Inventory Strategy: High-priority items (Class A) receive higher service targets, safety stock, and frequent review. Lower-priority items (Class B and C) are managed with less resource-intensive strategies, improving inventory turnover and reducing holding costs.

Simplifying Application with Class Mapping in SAP IBP

Once segmentation is complete, we map each class to its dedicated planning strategies within SAP IBP. This creates a clear operational roadmap for the weekly automated jobs that drive our planning cycles:

  • Class A: High-value products are managed using advanced forecasting techniques and multi-echelon inventory optimization, ensuring top availability.
  • Class B: Mid-tier products use standard forecasting and inventory policies, balancing efficiency without excessive investment.
  • Class C: Low-impact items are assigned straightforward reorder-point strategies to minimize planning effort and associated costs.

This framework streamlines the entire implementation, keeping planning cycles transparent and efficient. Planners can easily monitor results and adjust strategies as needed without navigating unnecessary complexity.

Built to Scale and Adapt

Our method is inherently scalable and adaptable. As business needs change—whether due to new product launches or shifting market dynamics—we can increase segmentation granularity or introduce custom rules, particularly within critical Classes A and B. This scalability ensures the planning process continuously evolves while maintaining its robust core structure.

By leveraging advanced segmentation within SAP IBP, we deliver targeted, data-driven, and automated planning that supports growth, resilience, and operational excellence.

How does your organization approach product classification and automated planning? We invite you to share your strategies and experiences in the comments below.

Contact us today to schedule a quick assessment of your organizational readiness for implementing SAP IBP.