The Art of Planning the Distant Horizon: Long-Term Capacity Optimization in SAP IBP

Abstract

Long-term capacity planning underlies strategic supply chain planning, allowing for the alignment of production capacity against forecasted demand, cycles of investment, and fluctuating market needs. In the face of volatility, uncertainty, and rapidly intensifying technological changes, the ability to plan optimally in the long term is not only preferable, but essential. The paper unravels the methodology and technological landscape of long-term capacity planning in the context of SAP Integrated Business Planning (IBP), a leading platform for enterprise-wide planning unification. By reconciling the latest literature, industry knowledge, and the functional ability of SAP IBP, the study provides a structured framework that guides enterprises in the planning of capacities at the 5–10-year horizon. The paper discusses how plan components, such as the Demand, Supply, and Sales & Operations Planning (S&OP) module, cumulatively yield a harmonized view of the constraints of the supply chain, resource allocation, and scenario-based planning. Optimization methodologies, ranging across heuristic to the constraint-based formulations, are covered in terms of suitability in the application of SAP IBP. Besides, significant challenges, including granularity of data, cross-functionality, and system limitations, are highlighted along with mitigation strategies. The study ends by summarizing the potential of the combination of artificial intelligence, the use of digital twins, and sustainability initiatives in future planning scenarios, placing the application of SAP IBP as a lead application in the development of Industry 5.0-ready, agile, and resilient supply chains.